Hildreth Institute in WBUR

This article originally appeared in WBUR.

State lawmakers this week agreed to use nearly $500 million in so-called "millionaires tax" to deliver a major boost to K-12 school funding.

It's a move that some see as fulfilling the voter-approved mission of the surtax. Yet others worry the funds aren't being used as intended: to launch new education and transportation initiatives.

The budget that lawmakers sent to Gov. Maura Healey’s desk Monday includes a $496 million expansion to the state’s Chapter 70 funding, which provides education revenue for local school districts. That money comes from revenue generated by the 4% surtax on annual income over $1 million. The surtax was approved by voters in 2022 through a ballot question, also called the Fair Share Amendment.

That single education line item accounts for just more than 20% of the $2.4 billion in surtax spending lawmakers agreed to for the fiscal 2026 budget. It represents a shift in how that revenue is being used — and it has drawn mixed reactions even among the groups that campaigned for the surtax in the first place.

In past budgets, similar increases to Chapter 70 were paid for through general state revenues. The shift this year raised red flags for those who view the surtax as a way to go above and beyond standard funding obligations.

"Voters overwhelmingly approved the Fair Share Amendment to enable new investments in public education and transportation — not to plug existing budget gaps," said Bahar Akman Imboden, director of the Hildreth Institute, a research center focused on equity in higher education. She said she was "disappointed" to see nearly $500 million "being used to backfill" K-12 spending.

Others who supported the amendment said they understood why lawmakers shifted the money as they did, as the state anticipates cuts from Congress and President Donald Trump’s administration.

"This budget was crafted with concern over what is going on at the federal level," Massachusetts Teachers Association President Max Page said.

Legislators are using surtax funds to cover spending for the 2019 Student Opportunity Act, which is phasing in more than $1.5 billion in additional funding for districts over seven years. Page said he hopes next year so much surtax money won't be used for the SOA.

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"The way it’s been working, which we really approve of, is the regular budget funds the SOA investments, and we can do new investments like higher minimum aid, universal school meals, capital fund investments, through Fair Share," he said.

The fiscal 2026 budget increases Chapter 70 funding by $460 million over the previous year, according to the Senate Ways and Means Committee. That increase is funded with surtax dollars. In addition to supporting the fifth year of SOA implementation, the $496 million line item for so-called SOA expansion also includes a sharp increase in minimum per-pupil aid, from $104 to $150.

Imboden warned that reallocating surtax revenue to cover existing commitments could undermine recent progress in spending surtax dollars on higher education, which has included making community colleges free and financial aid expansions.

Those initiatives are continued in this budget, but she warned, "without corresponding investments in campus capacity, student supports, and infrastructure, the gains we’ve made in encouraging more Massachusetts students to pursue higher education will falter."

About 11% of the surtax revenue in the fiscal 2026 budget is allocated to higher education, according to the Hildreth Institute — a roughly $5 million decrease from the previous year. On average, higher education line items saw a 0.5% increase in the fiscal 2026 budget, the Institute noted.

In previous years, surtax funds have been used to launch major new programs like universal free school meals, fare-free Regional Transit Authorities and free community college for all Massachusetts residents. Those are continued in the fiscal 2026 budget. Groups who backed the surtax saw those programs as examples of using the money for "supplementing, not supplanting" existing spending on education and transportation through general revenue.

A policy analyst from a think tank that backed the surtax campaign says the funding change this year was likely necessary in the face of economic uncertainty, tighter general revenues, and a difficult fiscal year for most school districts around the state.

"There are more new things you could do if you weren’t using so much of it for Chapter 70, so it’s hard to see in isolation. It’s complicated," said Colin Jones, deputy policy director at the Massachusetts Budget and Policy Center.

"But this year when we hear talk about things like the impact of the trade war, tariffs, the economy and the federal budget, they’re building flexibility with this maneuver to increase Fair Share to cover basically all of the Chapter 70 increase this year," he said. "That frees up general funds to do other stuff. And flexibility in this environment is pretty good."

The Raise Up Massachusetts coalition, which led the ballot campaign to pass the surtax, also defended the Legislature's approach.

"The Constitution doesn't allow specific appropriations in a ballot measure, so it gives the Legislature the ability to spend the money on the priorities that they choose, and we expect that those priorities may shift and evolve as time goes on," said Andrew Farnitano, a spokesperson for the coalition.

Farnitano pointed to the strength of surtax revenue collections as a sign the funding stream can be relied upon for major investments.

"The intention of the amendment was to give the state the resources to make these decisions and have these conversations through the budget process, where we have the resources that are necessary," he said.

The Department of Revenue reported in May that it had collected nearly $2.6 billion from the surtax between July 1, 2024 and April 30, 2025 — exceeding the total for all of fiscal 2024 with two months of fiscal 2025 still to be counted. Secretary of Administration and Finance Matthew Gorzkowicz has said total fiscal 2025 surtax collections could approach $3 billion.

Meanwhile, general tax collections have plateaued.

From the House floor Monday, House Ways and Means Chair Aaron Michlewitz made the case for moving Chapter 70 obligations into the surtax category.

"This shift will further limit any potential exposure with general fund revenue while holding to our commitment to fully fund the fifth year of the Student Opportunity Act," he said. "This reduction in overall spending will better prepare the commonwealth for potential economic turmoil in the months ahead."

Senate Ways and Means Chair Michael Rodrigues' office also cited the unexpectedly high surtax receipts as a factor in the decision to expand its use.

"In light of higher than initially estimated Fair Share collections, we felt comfortable increasing the conference amount to allow for transformative investments in education and transportation," said Rodrigues spokesperson Sean Fitzgerald.

Still, critics worry about setting a precedent that allows baseline education costs to be paid for with what was pitched to voters as a tool for innovation.

"While we understand FY2026 presents fiscal challenges, Massachusetts has one of the strongest rainy day funds in the country; reserves that exist precisely to help us sustain progress during hard times," Imboden said. "Now is the moment to honor the will of the voters and ensure that Fair Share dollars are used to move us forward, not simply to hold the line."