A new report identifies a $1.26 billion shortfall between state appropriations and actual municipal spending on existing programs that are mandated by the state.

Auditor Suzanne Bump's report flags gaps in state aid for school transportation, education, veterans' benefits, and other services within cities and towns. The school transportation gap was estimated at $448 million in the report, which pegged the education aid gap at $711 million and attributed $401 million of that gap to insufficient special education assistance.

In a statement, Bump said the new report provides legislators "with the information they need to address the burden of unfunded mandates."

"The solution to the problem of unfunded mandates is to prioritize funding of them. It is a simple solution, but it may require some hard choices," said Bump, a former state representative.

According to Bump's office, the new report also identifies "inadequacies in existing formula distributions that result in glaring unequal distributions to similarly-situated communities."

The report commends the state for recent increases in local aid to cities and towns, but provides a framework for debate expected in 2023 over the adequacy of aid and the state's local mandate law, which generally provides that post-1980 laws or regulations that impose new service or cost obligations on cities and towns shall be effective only if accepted locally or fully funded by the state.

"This report confirms that cities and towns are facing deep financial pressures, and explains why our communities rely so heavily on local aid and key municipal and school reimbursement programs," Massachusetts Municipal Association Executive Director Geoff Beckwith said. "Fortunately, progress is being made, and it's important to underscore the strong partnership that cities and towns have with the Legislature."