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February 25, 2014

School spending fix in the works

State legislators may have a solution to a bureaucratic catch that could wind up penalizing Methuen at least $1.4 million in state school funding.

State Sen. Kathleen O’Connor Ives, D-Newburyport, whose district includes Methuen, said a recent funding bill approved in the Senate fixes a problem in how school spending is counted by the state for Methuen and dozens of other communities. But Methuen is among a handful where that problem could result in penalties.

“It addresses cities that did not include retired teachers heath care costs,” O’Connor Ives said. “For those that didn’t, it would remove the penalties and the costs associated with that accounting mistake. Now the goal is to get it in the House bill.”

The problem dates back two decades to the 1993 education reform bill. Methuen and many other communities checked a box on a form stating they would not include retired teachers’ health care costs toward the total amount of education spending the city must spend. State regulations prevent the box from being unchecked, requiring action by the Legislature.

In 1993, and even 2003, that was not an issue. But as retirees’ health care costs have soared beyond $10 million a year, it is stretching Methuen’s school budget, which the city annually has set at the minimum required by the state.

Total health insurance spending for retired teachers tripled over 10 years, from $4 million in 2002 to $12.8 million in 2012, according to Methuen officials.

In the last few years, Methuen technically has not spent what the state requires on education. The cost of retirees’ health care, which the city covers, has not counted toward the minimum spending requirement. For the years when the city was less than 5 percent under the minimum, the difference carried over to the next year. But when the difference surpasses 5 percent, the state withholds education funding.

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