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The Aid Formula - Factors That Create Change WASBO Fall Conference Elkhart Lake

The Aid Formula - Factors That Create Change WASBO Fall Conference Elkhart Lake September 28, 2006 Lori Ames Jerry Landmark DPI School Finance Team. The Aid Formula – Factors that Create Change. How much aid is there? What determines how much each district gets?

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The Aid Formula - Factors That Create Change WASBO Fall Conference Elkhart Lake

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  1. The Aid Formula - Factors That Create Change WASBO Fall Conference Elkhart Lake September 28, 2006 Lori Ames Jerry Landmark DPI School Finance Team

  2. The Aid Formula – Factors that Create Change • How much aid is there? • What determines how much each district gets? • How can you tell where you are in the aid formula? • How can you spend more and lose aid? • Will your district’s placement in the aid formula change in coming years?

  3. 2006-07 EST GENERAL AID

  4. EQUALIZATION AID The state’s aid formula is a guaranteed tax base, sometimes called a “power equalization” formula. Once the amount the state contributes is set, the formula uses membership, shared cost and property value to determine aid. In theory, the higher the value of a district, the less aid it will receive…. And, the more it spends above the secondary cost ceiling, the smaller the aid/cost ratio

  5. 2006-07 EQUALIZATION AID As Shared Cost Increases DISTRICT SHARED COST PER PUPIL As Property Value Increases DISTRICT EQUALIZED VALUE PER PUPIL

  6. 2006-07 Equalization Aid Factors • DISTRICT • Membership • School Aid Value + Computer Value • Shared Cost • STATE • Cost Ceilings- Primary Secondary • State Guaranteed Value Per Member- Primary Secondary Tertiary

  7. 2006-07 K-12 STATEAID FACTORS • Primary Cost Ceiling - $1,000 (Set by Law) • Secondary Cost Ceiling- $8,366 (90% State Average Shared Cost Per Member)

  8. 2006-07 K-12 STATEAID FACTORS • Primary Guarantee- $1,930,000 (Set by Law) • Secondary Guarantee- $1,260,004 (“Floats” to Distribute the Appropriation) • Tertiary Guarantee - $483,033 (Average Property Value Per Member)

  9. 2006-07 DISTRICTAID FACTORS Use prior-year district data. ✔ 2005-06 Shared Cost ✔ 2005-06 Membership ✔ 2005 School Aid Values

  10. 2006-07 DISTRICT SPECIFICS • Membership- Sep. 2005 FTE + Jan. 2006 FTE (includes Youth Challenge and Second Chance Partnership students) divided by 2, plus 2005 summer school FTE, part-time, and foster group home. • Equalized Value - 2005 School Aid values certified in May, 06. (Value as of 1/1/2005 was first certified in the Tax-Apportionment values in 10/05. Adjustments from appeals were made, and the final 2005 values were certified in 5/06 as School Aid values.) • Shared Cost – Cost for which you don’t have another revenue source except property tax and state aid

  11. 2006-07 EQUALIZATION AID DISTRICT SHARED COST PER PUPIL DISTRICT EQUALIZED VALUE PER PUPIL

  12. DISTRICT WORKSHEETS ✔“Simplified” Percentage Method ✔July 1 Estimate Method Algebraically, virtually the same. May be some difference due to rounding.

  13. WORKSHEETS ON THE WEB School Financial Services Homepage http://www.dpi.wi.gov/sfs/index.html On the Green Scan Bar: Worksheets/DPI Printed Worksheets/General Aid and Adjustment Worksheets

  14. EQUALIZATION AID

  15. TIER 1 CALCULATIONSample District – Positive Aid 13.74% x $1,000 = $137.41 District 86.26% x $1,000 = $862.59 State Aid = 13.74% $862.59 x membership = 1st Tier Aid $862.59 x 1,118 = $964,371.11 (Compare to G5)

  16. TIER 2 CALCULATIONSample District – Positive Aid = 21.05% 21.05% x $7,366 = $1,550.41 District 78.95% x $7,366 = $5,815.59 State Aid $5,815.59 x membership = 2nd Tier Aid $5,815.59 x 1,118 = $6,501,825.78 (Compare to G10)

  17. TIER 3 CALCULATIONSample District – Positive Aid = 54.91% 54.91% x $392 = $214.97 District 45.09% x $392 = $176.56 State Aid $176.56 x membership = 3rd Tier Aid $176.56 x 1,118 = $197,394.58 (Compare to G15)

  18. TOTAL EQUALIZATIONSample District – Positive Aid

  19. EQUALIZATION AIDSample District – Positive Aid The aid amount of $7,663,591 is now adjusted for : • Milwaukee Charters ($64,318) • Equal Aid Adj 0 • Final Total (rounded) $7,599,273 ….from the July 1 estimate….

  20. COST SHARING PERCENTAGESample District – Positive Aid = 77.62%

  21. TIER 1 CALCULATIONSample District – Negative Aid 36.31% x $1,000 = $363.15 District 63.69% x $1,000 = $636.85 State Aid = 36.31% $636.85 x membership = 1st Tier Aid $636.85 x 3,719 = $2,368,453.48 (Compare to G5)

  22. TIER 2 CALCULATIONSample District – Negative Aid = 55.62% 55.62% x $7,366 = $4,097.32 District 44.38% x $7,366 = $3,268.68 State Aid $3,268.68 x membership = 2nd Tier Aid $3,268.68 x 3,719 = $12,156,222.41 (Compare to G10)

  23. TIER 3 CALCULATIONSample District – Negative Aid = 145.10% 145.10% x $1,008 = $1,462.54 District -45.10% x $1,008 = $-454.58 State Aid $-454.58 x membership = 3rd Tier Aid $-454.58 x 3,719 = $-1,690,580.03 (Compare to G15)

  24. TOTAL EQUALIZATIONSample District – Negative Aid

  25. EQUALIZATION AIDSample District – Negative Aid The aid amount of $12,834,096 is now adjusted for : • Milwaukee Charters ($ 107,713) • Equal Aid Adj 0 • Final Total (rounded) $12,726,382 ….from the July 1 estimate….

  26. COST SHARING PERCENTAGESample District – Negative Aid = 36.51%

  27. Hold-Harmless Provisions • Assuming a district is in the aid formula: • A district will always receive primary aid • Negative tertiary aid will subtract from positive secondary aid • Negative secondary aid can not subtract from positive primary aid • A district’s equalization aid eligibility will be at least 85% of the prior year – to meet the 85%, a district will receive special adjustment aid

  28. Equalization Aid New Spreadsheet!!! • It gives you equalization aid factors by district across a 7 year period to help you analyze why your aid has changed – and lets you see past trends to help you estimate how it may change in the future.

  29. Timeline of DPI-Provided Aid Worksheets • April (?) • July 1 (required by law) • Late September (used as a data check for the October 15 Certification) • October 15 Certification (must be used in the Revenue Limit) • Final (typically completed in summer)

  30. AID USED IN REVENUE LIMIT 2006-07 October 15 Aid Certification 2006-07 Revenue Limit

  31. OCTOBER-JUNE ADJUSTMENTS • Per 121.15 (4) (b), districts use the October 15 Certification in their Revenue Limit computation. • Final aid is computed sometime during the following spring/summer. • Differences between the 2 aid runs are made as an adjustment to the payment made in September of the following school year.

  32. MISCELLANEOUS • What was two-thirds funding? • It was a calculation done at the state level that added together several revenue sources, (levies, state and categorical aid and levy credit) to determine an amount that the state will pay, in total, to districts. • What did two-thirds funding mean for individual districts? • It never meant that each district would receive 66.7% of their cost as aid. A district might or might not have had the state fund two-thirds of its costs. It depended where the district was in the equalized aid formula. The 66.7% requirement was removed from Wisconsin law in 2003.

  33. QUESTIONS?

  34. THANK YOU! Please call us with questions or comments! • Brad Adams, Consultant, 267-3752 • Lori Ames, Consultant, 266-3464 • David Carlson, Director, 266-6968 • Gene Fornecker, Auditor, 267-7882 • Kathy Guralski, Auditor, 266-3862 • Karen Kucharz, Consultant, 267-9707 • Jerry Landmark, Assistant Dir., 267-9209 • Natalie Rew, Auditor, 267-9212

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