Understanding General Aid

Erin Fath, Assistant Director, School Financial Services Team, DPI

Bob Avery, Director of Business Services,

Beaver Dam Unified School DistrictKaren Kucharz Robbe, Finance

Consultant,School Financial Services Team, DPI

Agenda

Review of Underlying Principles of Equalization Aid

Walk-Thru the Equalization Aid Worksheet

Discuss Other General Aid Programs, including “Special Adjustment” (aka “Hold Harmless”) Aid

2

Handouts

A. Sample District (% method Equalization Aid)

District-Specific 2013-14 October 15 Certification

(% method Equalization Aid) B. Simplified Percentage Method

Scenario Handout

District-Specific 2014-15 July 1 Estimate

(statutory method Equalization Aid) C. Sample Longitudinal Equalization Aid

District-Specific Longitudinal Equalization Aid

Power Point Slides

44

Under Article 10 of WI State Constitution, the State Legislature is responsible for establishing school districts

which are to be:

“as uniform as practicable … ”

“free and without charge for tuition to all children”

“each town and city shall be required to raise by tax, annually, for the support of common schools therein……”

How does the Legislature achieve this?

Equalization Aid

Property ValueInequality

5

($1,000,000/1,000) x $10 = $10,000

66

The State provides financial assistance in the form of Equalization/General Aid to school districts in order to:

Reduce the reliance upon the local property tax as the sole source of revenue for educational programs.

Guarantee that a basic educational opportunity is available to all pupils regardless of the local fiscal capacity of the district in which they reside.

A student should not be unfairly disadvantaged as a consequence of where he or she lives.

Equalization Aid

77

Equalization Aid

The fundamental purpose of the Equalization Aid formula is to “level the playing field” by providing assistance (distributing aid) to poorer districts (those with lower property value) to

make up for what they can’t get from their property tax base.

Legislature and Funding Formula

8

Equalization Aid

Property Tax Base

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

Number of Children

to Educate

2010 10 10 10$100,000

$400,000 $250,000

$300,000

$200,000

Notice how the tax base, as a measure of wealth, changes after incorporating the number

of children to educate.

Property Value

per Member

10

11

# of Districts Receivin

g Aid

14-15 July 1 Aid Estimate(Prior to Choice/Charter

deductions)

% of General Aid Appropriatio

n

Equalization 405 $4,391,233,379 98.1%

Inter-District 22 $20,778,746 0.5%

Intra-District 4 $44,800,895 1.0%

Special Adjustment 72 $19,145,775 0.4%

Total General Aid * 422 $4,475,958,795 100.0%

No General Aid 2 $0

General School Aids

* Some districts receive more than one type of aid.

12

General School Aids

All 4 aid types are considered “General Aid” & are included in Line 12A of the Revenue

Limit Worksheet.

Equalization Aid: based on Membership, Shared Costs, Equalized Values – “ability to pay” determines position in formula

Inter-District Aid: based on eligible costs / pupils (only 22 districts)

Intra-District Aid: based on eligible pupils / Equalization Aid (only 4 districts)

Special Adjustment Aid: ensures districts receive at least 85% of the prior year’s General Aid eligibility (Equalization/Inter-/Intra- Aids)

Equalization Aid

Why do you need to know how to calculate aid

when DPI calculates it for you?

Because you will be asked by your board members, constituents, and the media.

So you can figure out why your aid has changed AND explain why.

Because you may want to do estimates and “what ifs”…

Equalization Aid

3 District Factors

Spending (Shared Cost)

Wealth (Property Tax Base)

Number of Students to Educate (Membership)

Total General Fund (Fund 10) Expenditures

+ (plus)Total Debt Service Funds (Funds 38 &

39) Expenditures- (minus)

all local misc. revenue, grant revenue,and categorical aid.

Result is “Shared Cost”

Shared Cost

Local Property

Tax43%

Local Misc. Receipts

1%Other Misc.3%

State General

Aid44%

Categor-ical

State Aid3%

Federal Aid5%

General Fund (10)Net Cost

Local Property

Tax98%

Misc Local Revenue

2%

Debt Service Funds (38 & 39)

Net Cost

Shared Cost

Property Value

Property tax base is used to determine district wealth and ability

to support district expenditures.

Uses Equalized Valuation or Fair Market Value.

(NOT Assessed Value)

Values certified in May are used in the following year’s aid calculations.

Membership

Average of 3rd Friday F.T.E. - September

2nd Friday F.T.E. - January(each count includes parttime attendance, residents and non-

residents)

+ Summer School F.T.E

F.T.E. = full-time equivalent2 halftime (.50) kindergarten students = 1 F.T.E.

Summer School = 48,600 minutes of instruction = 1 F.T.E.

Equalization Aid

The computation is actually 3 individual

computations……..

The results of all 3 are summed to get the district’s total aid.

Equalization Aid

3 State Factors

Cost Ceilings

Guaranteed Property Valuations Per Member

Amount of Money to Distribute

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

0 200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2,200,000

2,400,000

2,600,000

2,800,000

3,000,000

3,200,000

3,400,000

DISTRICT VALUE PER MEMBER

DIS

TR

ICT

SH

AR

ED

CO

ST

PE

R M

EM

BE

R

Positive Primary Aid

Positive Secondary

Aid

District Value per Member

10%

90%

75%

25%

50%

50%

Equalization Aid

Positive Tertiary

Aid

DISTRICT

10% x $1,000

= $100

25% x $8,000

=$2,000

50% x $3,000

=$1,500

$3,600

STATE

90% x $1,000

= $900

75% x $8,000

= $6,000

50% x $3,000

= $1,500

$8,400

$3,600 + $8,400 = $12,000

Per-Pupil FundingSample District #1

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

0 200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2,200,000

2,400,000

2,600,000

2,800,000

3,000,000

3,200,000

3,400,000

DISTRICT VALUE PER MEMBER

DIS

TR

ICT

SH

AR

ED

CO

ST

PE

R M

EM

BE

R

Positive Primary Aid

Positive Secondary

Aid

Positive

Tertiary

Aid

Negative Tertiary Aid

Equalization Aid

DISTRICT

30% x $1,000

= $300

75% x $8,000

= $6,000

150% x $3,000

= $4,500

$10,800

STATE

70% x $1,000

= $700

25% x $8,000

= $2,000

-50% x $3,000

= $-1,500$1,20

0$10,800 + $1,200 = $12,000

Per-Pupil FundingSample District #2

“October 15, 2013 ACT 46 Equalization Aid Computation – Percentage Method – Algebraic

Format”

http://sfs.dpi.wi.gov/sfs_buddev_eq

Location: SFS Homepage > Longitudinal Data > Equalization Aid

(handout)

Finding the Equalization Aid Percentage on the Internet

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

0 200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2,200,000

2,400,000

2,600,000

2,800,000

3,000,000

3,200,000

3,400,000

DISTRICT VALUE PER MEMBER

DIS

TR

ICT

SH

AR

ED

CO

ST

PE

R M

EM

BE

R

Positive Primary Aid

Positive Secondary

Aid

Positive Tertiary

Aid

District Value per Member

Negative Tertiary Aid

Negative Secondary Aid

No Equalization Aid

Equalization Aid

http://sfs.dpi.wi.gov/sfs_buddev_eq

Location: SFS Homepage > Longitudinal Data > Equalization Aid

Finding the Grid on the Internet

“2013-14 Equalization Aid Formula Position”

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

0 200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2,200,000

2,400,000

2,600,000

2,800,000

3,000,000

3,200,000

3,400,000

DISTRICT VALUE PER MEMBER

DIS

TR

ICT

SH

AR

ED

CO

ST

PE

R M

EM

BE

R

Positive Primary Aid

Positive Secondary

Aid

Positive Tertiary

Aid

District Value per Member

Negative Tertiary Aid

Negative Secondary Aid

No Equalization Aid

Equalization Aid

Watch Value Per Member Over Time

http://sfs.dpi.wi.gov/sfs_buddev_valuation

Location: SFS Homepage > Longitudinal Data > Property Valuation

(handout)

Finding the Value Comparison on the

Internet

“Longitudinal Equalization Aid Value-Per-Member

History”

Equalization Aid

Knowing where your district is in the formula will help you better explain how changes in local finances might affect

your state aid.

Simplified percentage method scenarios:http://sfs.dpi.wi.gov/sfs_workexe

What if we

underspend

our budget?

How does

that affect

our aid?

If we go to referendum, how will our aid change?

1. One (1) pot of money is split over 424 school districts based on district values, membership, and expenditures. Changes in individual district’s data affect each other’s aid.

2. Equalization Aid membership is an average of the September & January FTE counts, plus 100% of the Summer FTE. (includes parttime attendance)

3. Depending on district value-per member, some districts increase their aid by increasing expenses, while others decrease their aid by increasing expenses. It’s important to know where your district is in the formula.

4. Be aware of what is happening to your district over time.

Equalization Aid Takeaways

Equalization Aid - Using What You Know(for table discussion)

1.) How would a district’s aid change if the membership was 10% higher? 10% lower?

2.) How would a district’s aid change if there was 10% more cost and same number of kids? 10% less cost?

Value per member would change.

All things being equal, more membership, less value-per-member, more aid

…and vice versa.

Which tier changes? Positively-aided would get more aid, negatively-aided would get less aid

...and vice versa.

Equalization Aid - Using What You Know

(for table discussion)

3.) How would a district’s aid change if the value was 10% higher? 10% lower?

Value per member would change.

All things being equal, more value would mean less aid

…and vice versa.

Equalization Aid - Using What You Know

(for table discussion)

4.) I’ve heard about 2/3rds funding. Does this mean I will get reimbursed for 66% of my Shared Cost?

No. The percentage aid a district will get in the aid formula depends on the district’s spending and

value per member.

2/3rds NEVER meant anything that applied specifically to districts. This was a calculation done

at the state level that added together several revenue sources (total school levies, total state and categorical aid and total levy credit) to determine the “pot” of aid to be distributed by the formula.

2/3rds is no longer law.

Special Adjustment Aid

2013-14 Final Aid Eligibility*

Equalization Aid (Line H1)

$914,004

Inter-District (Line I1)

$0

Intra-District (Line I1)

$0

Special Adjustment (Line I1)

$31,833

Total $945,837

X .85

85% Minimum for 2014-15

$803,961

2014-15 Aid Eligibility*

Equalization Aid (Line H1)

$523,943

Inter-District (Line I1) $0

Intra-District (Line I1) $0

Special Adjustment (Line I1)

$280,018

Total $803,961

X .85

85% Minimum for 2015-16

$683,367

Special Adjustment Aid ensures the district receives at least 85% of the prior year’s General

Aid eligibility.

* Prior to Choice/Charter Deductions.

Bruce Anderson, Consultant 608-267-9707Carey Bradley, Consultant 608-267-3752Dan Bush, Consultant 608-267-9212Karen Kucharz Robbe, Consultant 608-266-3464Gene Fornecker, Auditor 608-267-7882Michele Gundrum, Auditor 608-267-9218Brian Kahl, Auditor 608-266-3862Vacant, Assistant Director 608-267-9209Bob Soldner, Director 608-266-6968

Email: dpifin@dpi.wi.govPhone: (608) 267-9114 Fax:

(608) 266-2840

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Papers

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