This is a guest blog post from Luc Schuster, Deputy Director with the Massachusetts Budget and Policy Center. This blog post synthesizes and updates information in a longer MassBudget’s factsheet on Education Reform in Massachusetts, available online HERE.
Motivated by growing concerns that our schools were not serving all students well, especially those in high-poverty districts, Massachusetts passed the landmark Education Reform Act of 1993 (or Ed Reform), which included a bunch of changes to the way schools are financed. While pressing challenges remain, these changes helped position a much greater share of all Massachusetts children to learn and to thrive over the past couple of decades.
Ed Reform overhauled the state’s Chapter 70 education funding formula, making the distribution of state aid more adequate and more equitable by:
- Creating a minimum required funding level for all districts. A district’s minimum requirement is driven by its “foundation budget,” calculated by considering the characteristics of its student population (e.g. the total number of kids in each grade and the number of low-income students).
- Requiring communities to contribute revenue based on a uniform calculation of their local tax-raising capacity.
- Providing state aid to fill the gap between a district’s foundation budget and its required local contribution.
As part of a grand bargain to couple new policy reforms with greater state investment, Ed Reform included an ambitious commitment to increase education aid to local districts. The timing of this commitment coincided nicely with strong state economic growth, and education aid roughly doubled over the 1990’s. But the state’s fiscal situation deteriorated by the early 2000’s, due in large part to the annual loss of about $3 billion in revenue resulting from state-level income tax cuts phased-in between 1998 and 2002. With less revenue to support state programs, funding progress of the 1990’s has been partially reversed since 2002.
Part of the original motivation behind Ed Reform was a sense that the nation was rapidly moving towards a knowledge-based economy with a growing premium placed on the skills of a state’s workforce. This movement has continued over the past twenty years, underscoring the importance of investing in the education over the long term (see A Well-Educated Workforce is Key to State Prosperity).
Back in the late 1970’s states with more highly-educated workforces tended to have somewhat higher wages, but the relationship was pretty weak, with many outliers. States like Michigan and Ohio, for instance, were among the highest-wage states, even though they had lower levels of education, largely because these states had healthy manufacturing sectors with jobs that paid relatively well for people with only a high school degree.
Largely by 1993, and even more so today, there was a much stronger relationship between median wages and the education of a state’s workforce, with many fewer outliers. State leaders were right to identify the changing dynamic of education as the pathway to greater economic well-being back in the early 1990’s, and it appears that education will continue to play a central role in our state’s ability to build a strong, high wage, economy.