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Equalization Aid

Equalization Aid. Emily Koczela, Brown Deer Business Manager Karen Kucharz Robbe , School Financial Services Consultant Department of Public Instruction January 23,2014. U.S. Constitution on Education 10 th Amendment.

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Equalization Aid

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  1. Equalization Aid Emily Koczela, Brown Deer Business Manager Karen Kucharz Robbe, School Financial Services Consultant Department of Public Instruction January 23,2014

  2. U.S. Constitution on Education 10th Amendment “…powers not granted to the federal government by the Constitution, nor prohibited to the States, are reserved to the States or the people…” 1791

  3. 1848 Wisconsin Constitution “Each town and city shall be required to raise by tax, annually, for the support of common schools therein……” Article X, Section 4.

  4. 1848 Wisconsin Constitution “The legislature shall provide by law for the establishment of district schools, which shall be as nearly uniform as practicable; and such schools shall be free and without charge for tuition to all children between the ages of 4 and 20.” Article X, Section 2.

  5. Basic Framework State Responsibility District Schools As Nearly Uniform as Practicable Free Local Tax

  6. Supreme Court Uniformity goes to the “character of education,” not to the total amount spent. However, funding “character” cannot result in too great of a disparity of cash.

  7. Modern-Day Wisconsin In Wisconsin, the primary funding source for public schools is the property tax, but we know the property values across the state are not uniform. The challenge is defining “uniformity.”

  8. What is “uniformity”? (state aid is the same?) $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 10 mil tax (Example: $1,000,000 x .010) $10,000 $20,000 $30,000 $40,000 $50,000 $20,000 $20,000 $20,000 $20,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000

  9. What is “uniformity”? (“Robin Hood” principle with local tax?) $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $10,000 $20,000 $30,000 $40,000 $50,000 $20,000 $10,000 $ 0 $-10,000 $-20,000 $30,000 $30,000 $30,000 $30,000 $30,000

  10. NOT LEGAL Buse vs. Smith (1976) State cannot “recapture” from local tax base.

  11. What is “uniformity”? (state aid is related to local value) $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $10,000 $20,000 $30,000 $40,000 $50,000 $40,000 $30,000 $20,000 $10,000 $ 0 $50,000 $50,000 $50,000 $50,000 $50,000

  12. Starting to Come Together More local property wealth means less aid from the state.

  13. Number of Children to Educate $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 10 10 10 10 20 $100,000 $200,000 $300,000 $400,000 $250,000 Notice how the tax base per child changes after incorporating the number of children to educate.

  14. State Formula Takes into account BOTH property tax base AND number of children to educate.

  15. 2013-14 General Aid* Most districts receive only Equalization Aid. * Prior to Choice/Charter deductions.

  16. Property Value per Member

  17. Property Value per Member

  18. Property Value per Member Equalization Aid Property Tax Base

  19. Equalization Aid What about two-thirds funding? Two-thirds NEVER meant that each district would get 66.7% state aid! It was a STATE computation that added together several statewide revenue sources, (all local levies, state and categorical aid and levy credit) and multiplied that number by 66.7%. The result of this equation was put into the formula. Two-thirds is no longer law.

  20. Equalization Aid Formula • A cost-sharing formula • that incorporates: • Property Value • Number of Students to Educate • Spending

  21. General Fund Shared Cost

  22. Debt Service Funds Shared Cost

  23. District Factor – Shared Cost 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”

  24. District Factor - Wealth 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)

  25. District Factor – Membership F.T.E. = full-time equivalent 2 halftime kindergarten students = 1 F.T.E. Average of 3rd Friday F.T.E. - September 2nd Friday F.T.E. - January + Summer School F.T.E Summer School = 48,600 minutes of instruction = 1 F.T.E.

  26. The Computation …….is actually 3 individual computations…….. The results of all 3 are summed to get the district’s total aid.

  27. 3 State Factors Cost Ceilings Guaranteed Valuations Per Member Amount of Money to Distribute

  28. 3 District Factors Spending (“Shared Cost”) Wealth/Property Tax Base Students (“Membership”)

  29. Equalization Aid Formula District Value per Member Positive Tertiary Aid 50% 50% 25% 75% Positive Secondary Aid 10% 90% Positive Primary Aid

  30. Sample District ResultsPer-Pupil Funding $3,850 + $8,150 = $12,000

  31. Equalization Aid Formula Positive Tertiary Aid Negative Tertiary Aid Negative Secondary Aid Positive Secondary Aid Positive Primary Aid No Equalization Aid

  32. Where Can I Find This Grid For My District? http://sfs.dpi.wi.gov/sfs_buddev_eq “2013-14 Equalization Aid Formula Position”

  33. Equalization Aid Formula District Value per Member Positive Tertiary Aid Negative Tertiary Aid Negative Secondary Aid Positive Secondary Aid Positive Primary Aid No Equalization Aid

  34. Watch Value Per Member Over Time

  35. Where Can I Find Value Per Member Over Time For My District? http://sfs.dpi.wi.gov/sfs_buddev_valuation “School Aid Property Valuation” (Used in the Equalization Aid Formula)

  36. Equalization Aid Formula District Value per Member Positive Tertiary Aid Negative Tertiary Aid Negative Secondary Aid Positive Secondary Aid Positive Primary Aid No Equalization Aid

  37. Equalization Aid Takeaways 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. Equalization Aid membership is an average of the September & January FTE counts, plus 100% of the Summer FTE. 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. Be aware of what is happening to your district over time.

  38. 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. What if we underspend our budget? How does that affect our aid? If we go to referendum, how will our aid change?

  39. Thanks to WASB, WASDA and WASBO for the opportunity to speak to you today! * * * DPI School Financial Services Homepage WASBO Homepage http://dpi.wi.gov/sfs/index.html http://www.wasbo.com/ …..whew! you made it!.... Karen.Kucharz@dpi.wi.gov

  40. Please feel free to stop by the DPI booth if you’d like to chat more about your specific district data! We’ll have the 2013-14 Equalization Aid and 2013-14 Revenue Limit data available so you can continue the conversation with us…….. See you later!

  41. Equalization Aid Formula District Value per Member Positive Tertiary Aid Negative Tertiary Aid 50% 50% 25% 75% Negative Secondary Aid Positive Secondary Aid 10% 90% Positive Primary Aid No Equalization Aid

  42. Equalization Aid Formula District Value per Member Positive Tertiary Aid Negative Tertiary Aid 50% 50% 25% 75% Negative Secondary Aid Positive Secondary Aid 10% 90% Positive Primary Aid No Equalization Aid

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