Finance committee hears preliminary data on S.220; average education spending increase ~4.3%, no vote

Kelly Murphy, education finance director, told a Finance committee meeting that preliminary data from district budget submissions show an average increase in submitted education budgets of about 4.3 percent.

Murphy said staff had received roughly 100 district submissions and were seeing an overall response rate near 84 percent; several districts were still outstanding because of differing town meeting schedules. "The average increase of the budgets that I submitted is 4.3%," Murphy said, and she cautioned the figure was preliminary while stragglers are still being included and data are scrubbed.

Murphy also summarized component changes inside the submissions: "Budgeted education expenditures are up by 3 and a half percent, and offsetting revenues are actually down by 2.9%," she said, explaining some districts had relied on prior‑year fund balances that are no longer available.

Committee members pressed staff to clarify what counts as offsetting revenue and how volatile those components are from year to year. Members asked whether federal pandemic funds such as ESSER should be treated as offsetting revenue; presenters and some members said federal grants are usually earmarked for specific purposes and should not be treated the same as unrestricted offsets. Murphy said staff will provide district‑level breakout and a multi‑year view of offsetting revenues so the committee can judge volatility before deciding whether S.220 should tie allowable growth to education spending.

Members also discussed the broader context for recent increases: earlier, large revenue inflows (including online sales tax growth) and record spending jumps in prior years have left property taxes higher than pre‑COVID levels. Lawmakers and staff noted other drivers—rising health‑care and security costs in schools and services now provided by districts for higher‑need students—make simple comparisons to inflation and to other states difficult.

On reserves and fund balance, staff said districts capture and label reserves differently and some reserve accounts are restricted or voter‑approved for specific purposes; those restrictions can limit how fungible reserves are as offsetting revenue. Staff noted the Agency collects supplemental worksheets on reserves and the Agency of Education has added positions to help with consolidation and reporting required under Act 73.

S.220 — the spending‑cap construct discussed by the committee that would limit allowable growth based on education spending or per‑pupil cost with an appeals process — was scheduled as a possible vote for the upcoming Friday, but the chair asked if anyone would move to pass it today and no motion was made. The committee asked staff to supply more granular, district‑level offsetting revenue history (including a pre‑pandemic comparison) and to follow up on reserves reporting before the committee considers final action.

The committee adjourned without taking a vote on S.220; members said they will reconvene the discussion once the outstanding district submissions and requested clarifications are available.