The state may create a new fund to supplement school aid while it considers changes to the way it determines how much each community gets.

According to a bill in the Senate, the new appropriation would be geared toward communities that receive less than 15 percent of the state-mandated minimum school budget from the state's school aid program, known as Chapter 70. No dollar amount was included in the proposal, which would be an annual budget item.

"It would create a fund of sufficient size so the distributions would acknowledge that the (aid funding) formula was unfair," said state Sen. Bruce Tarr, R-Gloucester, who co-sponsored the bill.

If the proposal becomes law, communities would apply for funding and have to make their case each year.

This fund would be different from another program called the "pothole" fund, created in 2005 to help communities suffering from unique financial hardships fill gaps in their budgets. In Gloucester's case, the hardships are the decline of the fishing industry, and being a community with only moderate household income but high property values because of its coastal location.

Tarr, and state Reps. Anthony Verga, D-Gloucester, and Bradford Hill, R-Ipswich, have tried several times in the last few years to change the state aid distribution formula, which is based heavily on property value. In the last two budgets, the state has added patches to the aid formula, balancing property value with aggregate community income.

Tarr testified before the Legislature's Joint Education Committee in favor of the new fund, and in favor of another proposal that would set up a commission to study how to adjust the Chapter 70 formula and to monitor the effectiveness of any changes made.

Sen. Robert Antonioni, D-Leominster, said he hopes the committee, which he cochairs with Rep. Patricia Haddad, D-Somerset, will recommend the bill.

"The Chapter 70 formula has not been updated in terms of how we calculate the aid necessary for districts," he said.

The committee has not acted yet on the proposal.

Antonioni and Haddad were among a number of legislators who traveled around the state, including a stop in Gloucester, in 2005 to ask communities about how Chapter 70 affected their districts.

"I do remember there was a good turnout and people spoke passionately about the concerns for additional funding in Gloucester," Antonioni said.

Jumps in health insurance, contractual pay raises, energy costs and special education obligations account for the increase in the city School Department's budget over the last several years, while state aid has remained flat, said school officials.

Since 2003, the School Committee has reduced funding for programs, laid off staff and all but eliminated funding for athletics.

It has also started the process to close O'Maley Middle School. This year Fuller School's kindergarten through fourth-graders were dispersed among the city's five other elementary schools, leaving only fifth-graders at Fuller. Next year, O'Maley will close and its students will move to Fuller.

State education aid to Gloucester reached a high of $6.55 million in the 2001-02 school year and plateaued for a year. The following budget cycles led to substantial cuts across the commonwealth after recession reduced tax revenues.

Gloucester's aid has inched upward since, now reaching the $6 million mark. But the minimum school budget required by the state has increased - from $29.7 million in 2002-03 to $32.6 million last school year.

In June, the City Council approved a School Department budget of $35 million; the total city budget this fiscal year is $78.6 million.