You asked whether, in Massachusetts, Rhode Island, and New York, state education aid is typically sent directly to school boards or if it passes through town general funds. You also asked how this compares to Connecticut.

Of the four states, only New York has fiscally independent school boards. This means they have independent taxing and borrowing authority and can receive state aid directly. On the other hand, school boards in Massachusetts and Rhode Island, as well as the boards in New York’s five largest cities (New York City, Yonkers, Buffalo, Rochester, and Syracuse), are fiscally dependent and receive state aid via town or city financial authorities.

Connecticut state law makes each town a school district (CGS § 10-240) and requires town treasurers to pay school expenses on orders from local boards of education (§ 10-248). School boards’ budget totals are subject to approval by town finance authorities. The result is that state education grant money flows through town authorities. But the money must be used for the purpose for which was received. The town cannot divert it to other uses.

For certain state education reimbursement grants, the statutes specify how a town must transfer the money to its school board. For example, reimbursements for high-cost special education placements and special education costs for children placed by state agencies are paid to town treasurers. But treasurers must credit board of education accounts within 30 days after receiving documentation that a board’s special education spending has exceeded its budgeted amount for the year (§ 10-76g(b)).

Expenditure requirements for other state education grants are monitored through state audits and school district reports to the State Department of Education. In addition, the law requires towns to maintain minimum spending levels for education in order to receive Education Cost Sharing (ECS) grants, which is the largest state education grant to municipalities. Thus, although state education aid passes through town general funds, the money must be spent for education.

For your further information on this topic, we enclose recent reports on how the state ensures accountability for state education grants (2002-R-0897) and on the ECS minimum expenditure requirements and other state laws that limit how towns may spend ECS grant money for noneducational purposes (2001-R-0885).

JL: ro