Gov. Dannel P. Malloy this week received the first municipal aid report from the Office of Policy and Management. This first report provides a big-picture analysis of state-provided aid to local governments, including expenditures from grants and funding for capital projects. Additionally, it contextualizes that information with other areas of state funding in recent years. An additional report will follow containing information on the financial health of the municipalities in terms of their mill rates, fund balances, bond ratings and grand list changes.

The report makes clear that in recent years, municipal aid has continued to expand at the same time the state has cut billions of dollars in expenditures across state agencies, including a reduction in the number of state employees by more than 12 percent. Over the last five fiscal years, the state’s support to towns and cities has grown by nearly $1 billion, an increase of more than 21 percent. This has taken place while the state’s population has remained largely flat and student enrollment in public schools is down.

Municipal aid is the largest category of state spending within the entire general fund, totaling nearly $5.1 billion in fiscal year 2017.

Over the last five fiscal years, state aid to municipalities has increased more than 21 percent, far outpacing the growth in the state’s share of spending on Medicaid, debt service and transportation during the same period. There are two primary drivers of the increase in municipal aid costs – Education Cost Sharing (ECS) grants and teacher pensions. The continued escalation of ECS has made education spending one of the fastest growing functions of government, far outpacing transportation, corrections and regulation and protection as functions of government and helping explain the growth in municipal aid over the last several decades.

“It has always been my priority to shield education funding from the difficult choices we have had to make,” Malloy said in a statement. “At the same time, we are forced to make nearly impossible decisions and we must now prioritize safeguarding funding to the greatest extent possible in communities with concentrated pockets of poverty and the highest student needs.”