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Wednesday, February 26, 2014

PENALTY LETTE IN NEW FORMAT

Massachusetts Department of 2400 Elementary and Secondary Education 75 Pleasant Street, Malden, Massachusetts 02148-4906 Telephone: (781) 338-3000 TTY: N.E. T. Relay 1-800-439-2370
Mitchell D. Chester, Ed.D.
Commissioner

February 14, 2014
Catherine C. Latham, Superintendent Lynn School District
100 Bennett St
Lynn, MA, 01905-1201
Dear Superintendent Latham:
As you know, the Commonwealth's school finance statute, Chapter 70 of the General Laws, establishes an annual minimum local contribution requirement for each Massachusetts school district. This local contribution, when added to a district's Chapter 70 aid, equals its "net school spending requirement" Failure to comply with this requirement may result in the loss of Chapter 70 aid, delays in the approval of your municipal tax rate by the Department of Revenue, and/or enforcement action by the Attorney General.
Lynn's End-of-Year Financial Report shows that the district did not meet its spending requirement in FY13. Its required net school spending was $168,333,399. Reported net school spending was $159,747,443 which was $8,585,956 below the requirement. Of that amount $8,285,391 is carried forward and added to the FY14 formula requirement.
The remaining $300,565 constitutes the net school spending penalty for FY13. Chapter 70 requires that these funds be repaid to the Commonwealth through reductions in the city's monthly local aid payments. Because we are more than halfway through this fiscal year, I will permit the repayments to be spread across both FY14 and FY15. The Department's School Finance staff will be in contact with your office and city officials to finalize the exact repayment schedule.
I am aware that Lynn is one of the communities that are not permitted under current law to count retired teachers' health insurance costs toward net school spending. Last year the Legislature considered but did not adopt a proposal to permit all communities to include such costs. If such legislation is enacted in the future, we will adjust districts' net school spending reports as required. But until and unless such legislation is enacted, we must implement the penalty as currently required by statute.
Lynn's FY14 Chapter 70 formula net school spending requirement is $173,772,186. The $8,285,391 carryover from FY13 is added to that amount, resulting in a total requirement of $182,057,577. Schedule 19 budget data show that the district plans to spend $166,338,461 which results in a shortfall of $15,719,116 or 9.05 percent. If actual FY14 spending were to
match the amounts reported on this year's Schedule 19, then there would be an $8,688,609 carryover into FY14. There would be a Chapter 70 aid reduction of $7,030,507 in FY15 based on the FY14 spending.
If you have any questions concerning this information, please contact Roger Hatch in the School Finance unit at (781) 338-6527 (rhatch@doe.mass.edu).
c: Hon. Judith Flanagan Kennedy, Mayor, City of Lynn
Jeff Wulfson, Massachusetts Department of Elementary and Secondary Education Jay Sullivan, Massachusetts Department of Elementary and Secondary Education Roger Hatch, Massachusetts Department of Elementary and Secondary Education
Enc:
Massachusetts Department of Elementary and Secondary Education
Office of School Finance
Chapter 70 Net School Spending Compliance, FY13
School
163 LYNN Committee City/Town Total
1 Administration (1000) 4,528,162 1,791,714 * 6,319,876
2 Instruction (2000) 89,139,202 0 * 89,139,202
3 Attendance-Health (3100, 3200) 2,719,228 0 * 2,719,228
4 Food Services (3400) 718,954 718,954
5 Athletics/Student Activities/Security (3500,3600) 2,203,283 0 2,203,283
6 Maintenance (4000) 4,663,129 11,534,802 * 16,197,931
7 Employer Retirement Contributions (5100) 0 8,936,669 8,936,669
8 Insurance (5200) 278,711 20,544,389 20,823,100
9 Retired Employee Insurance (5250) 0 0 0
10 Rentals (5300) 33,333 0 * 33,333
11 Short Term Interest (5400) 0 0 0
12 Tuition (9000) 6,419,465 8,365,981 14,785,446
13 Total School Spending (lines 1 through 12) 110,703,467 51,173,555 161,877,022
14 FY13 School Revenues
14a) FY13 School Revenues * 388,494 0 388,494
14b) FY13 Charter Reimbursement 0 1,741,085 1,741,085
14c) Subtotal, School Revenues (14a+14b) 388,494 1,741,085 2,129,579
15 FY13 Net School Spending (13 minus 14) 159,747,443
16 FY13 Chapter 70 Required Net School Spending 165,707,824
17 Carryover from FY12 2,625,575
18 Total FY13 Net School Spending Requirement (16 + 17) 168,333,399
19 Shortfall in Net School Spending (18 minus 15) 8,585,956
20 Carryover/Penalty Calculation, Percent Unexpended (19 / 16) 5.18%
21 FY13 Carry-Over into FY14 (Line 19 or 5% of line 16 ) 8,285,391
22 Penalty (19 minus 21) 300,565

* Budgeted amounts as reported on FY12 End of Year Pupil and Financial Report, Schedule 19
gici2g1/14
Massachusetts Department of Elementary and Secondary Education
Office of School Finance
Chapter 70 Net School Spending Compliance, Budgeted FY14
163 LYNN School Committee City/Town Total
1 Administration (1000) 4,224,582 1,686,058 5,910,640
2 Instruction (2000) 90,596,639 0 90,596,639
3 Attendance-Health (3100, 3200) 3,101,249 0 3,101,249
4 Food Services (3400) 888,621 888,621
5 Athletics/Student Activities/Security(3500, 3600) 2,435,190 0 2,435,190
6 Maintenance (4000) 5,307,721 10,043,949 15,351,670
7 Employer Retirement Contributions (5100) 0 9,477,815 9,477,815
8 Insurance (5200) 300,000 22,599,797 22,899,797
9 Retired Employee Insurance (5250) 0 0 0
10 Rentals (5300) 40,000 0 40,000
11 Short Term Interest (5400) 0 0 0
12 Tuition (9000) 6,655,798 11,092,063 17,747,861
13 FY14 Budgeted School Spending (lines 1 through 12) 113,549,800 54,899,682 168,449,482
14 FY14 Budgeted School Revenues
14a) FY14 Budgeted School Revenues 0 0 0
14b) FY14 Charter Reimb (local districts) 0 2,111,021 2,111,021
14c) Subtotal, NSS Revenues (36a+36b) 0 2,111,021 2,111,021
15 FY14 Net School Spending (13 minus 14) 166,338,461
16 FY14 Chapter 70 Required Net School Spending 173,772,186
17 Carryover from FY13 8,285,391
18 Total FY14 Requirement (16 + 17) 182,057,577
19 Shortfall in Budgeted FY14 Net School Spending (18 - 15) 15,719,116
Carryover/Penalty Calculation, Percent Unexpended (19 / 16) 9.05%
21 Potential Aid Penalty (Amount of Line 19 Greater Than 5% of Line 16)

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