You asked for a year-by-year summary of legislative changes in the Education Cost Sharing (ECS) formula in the last 10 years (since 1991).

SUMMARY

The ECS formula was enacted in 1988 to take effect on July 1, 1989. It was to be phased in over four years and be fully implemented in FY 1993-94. Since 1988, the General Assembly has adjusted the ECS formula in every session. Until 1998, virtually all the changes served to reduce the state's costs and, given fiscal constraints, to reallocate available state aid to different kinds of towns.

In 1995, the formula was completely revamped and a formerly separate special education grant was merged with ECS. ECS grants for 1995 and thereafter are not comparable to those for previous years. In 1998 and 1999, the state increased ECS aid to towns, mostly by adjusting the foundation amount and adjusting and phasing out constraints on the growth of state aid, including caps and stop-losses.

In 2000, the legislature increased the bonus for regional school districts and extended the formula for calculating the minimum expenditure requirement existing (MER). In 2001, it established a formula for distributing $ 75 million over the 2001-03 biennium to towns affected by the ECS cap, established minimum grants for all towns for

both years, extended the existing foundation for two years, and exempted Waterbury from the MER under certain conditions. As of the date of this report, no ECS legislation had been adopted for 2002 or future years.

For your further information, we enclose an OLR background paper that explains the ECS formula and its terminology (2000-R-1149).

1991

PA 91-7 of the June Special Session reduced ECS hold-harmless grants to towns for FY 1991-92. Instead of a grant for 100% of the difference between a town's formula entitlement and, in the case of the 16 wealthiest towns, its last year's aid or, in the case of the remaining towns, a 4% increase in aid, the act paid a percentage of that difference. For the 16 wealthiest towns, unless 20% of their students met measures of educational need or poverty, the grant was 25% of the difference. For all other towns, the grant ranged from 38. 2% to 80% of the difference, depending on wealth.

For years beyond FY 1991-92, towns were held harmless only to the prior year's level, so towns were no longer guaranteed a minimum 4% increase in ECS aid every year.

1992

PA 92-262, for the first time, capped towns' annual increases in ECS aid at 4. 35% regardless of their formula entitlement. It also cut the guaranteed wealth level from 1. 6651 to 1. 5361 times the median town's wealth. And it revised the hold-harmless grants to give greater percentages of the difference from the prior year's grant to towns with relatively more economically and educationally needy students and high tax rates as follows:

· If a town's equalized mill rate was higher than that of a majority (85) of towns or if it qualified as a distressed municipality, it received at least 50% of the difference from the prior year's grant.

· If a town's combined AFDC and educational need percentage was 40% or more, its hold-harmless percentage was doubled.

The act extended the three-year phase-in of the MER for an additional year (through FY 1992-93). Instead of requiring all towns to spend at least the foundation ($ 4,800) times their student count, weighted for educational and economic need (the target MER), the act established alternate MERs. The alternatives were either (1) a percentage of the target MER equaling the ratio of the town's actual ECS grant for the year to its ECS entitlement or (2) if greater, its prior year's regular education expenditure plus all its increased ECS aid.

The 1992 act cut the minimum state reimbursement for special education costs from 10% to zero and eliminated all reimbursements for gifted and talented programs. It established a special education hold-harmless grant of at least 2% for towns that would otherwise lose money.

1993

PA 93-145 froze the ECS foundation level at $ 4,800 (the FY 1992-93 level) for FYs 1993-94 and 1994-95. The formula had required the foundation to be recalculated each year based on the regular education expenditures per need student in the 80^th percentile town, when all towns are ranked from lowest to highest according to those expenditures.

If a town's ECS grant increase for the previous year plus its regular per-pupil expenditures for the same year was greater than its MER in the previous year, the act required it to spend all its additional state aid on education up to a maximum of 105% of the previous year's spending in FY 1993-94 and up to 110% thereafter.

1994

PA 94-245 exempted the additional funds school districts must spend to compensate for missing their previous year's MER from being counted as regular education spending in establishing future MERs.

1995

Formula Factors

PA 95-226 created an entirely new ECS formula for FYs 1995-96 and 1996-97. It:

· Reduced the theoretical foundation level from $ 6,138 for FY 1994-95 to $ 5,711 for FYs 1994-95 and 1995-96, although increasing it from the actual frozen FY 1994-95 level of $ 4,800.

· Raised the guaranteed wealth level from 1. 5361 to 1. 55 times the median town wealth.

· Included special education students in the student need count under ECS and repealed the separate sliding scale reimbursement grant for special education costs.

· Changed the income adjustment in the town wealth factor from the ratio of a town's per capita income to that of the highest per capita income town to the average of that ratio and the ratio of its median household income to the highest median household income town. The change sent more aid to towns with a higher proportion of small families.

· Used an average of town wealth divided by student need count alone and divided by both student need and total population, thus sending more aid to towns with relatively smaller proportions of their populations attending school, such as towns with large elderly populations.

· Added a 10% weighting to the student need count for students whose English is limited but for whom the school board is not required to provide a bilingual program.

Cap and Stop-Loss Constraints

The act capped annual ECS grant increases to each town at 2% times the ratio of its wealth to the wealth of the 153^rd wealthiest town but no more than a maximum of 2% above the prior year's grant. It eliminated the hold-harmless grant under which no town could suffer an aid decrease. Instead, it imposed a maximum loss provision (called a "stop-loss"). For FY 1995-96 the stop-loss was 3% times the ratio of the town's wealth to the wealth of the 17^th wealthiest town but no more than minus 3%. For FY 1996-97, the stop-loss was minus 9%.

Minimum Expenditure Requirement

The act set a new MER equal to the town's previous year's regular program expenditures plus the amount of any ECS aid increase or, if less, the town's MER cap for FY 1994-95 plus its increase in aid.

Supplemental Grants

PA 95-226 also established the following:

· A supplemental aid grant based on a town's relative proportions of children whose families receive AFDC and who score below the remedial level on the mastery test. The grant established a supplemental aid ratio for each town and multiplied that ratio by the foundation level of spending weighted for students' economic and educational needs.

· A supplemental special education grant beginning in FY 1995-96 for towns with greater than average special education expenditures. The grant was calculated by taking the difference between the town's net special education costs and the statewide average and multiplying that by the town's base aid ratio (one minus the ratio of its wealth to the state guaranteed wealth level. ) The supplemental grants were subject to available appropriations, so they could be smaller than this formula required in any particular year.

· A density supplement for towns with greater than average population density. The density supplement was excluded from the cap and stop-loss.

· A student improvement grant for schools that demonstrated improvement in mastery test scores. The mastery improvement bonus was eliminated from the mastery count in the student need weighting.

1996

PA 96-78 reduced ECS grants for FY 1996-97 by 1. 02% for the 42 wealthiest towns and by . 56% for all other towns.

1997

PA 97-318 extended the ECS formula though FY 1998-99 with the $ 5,711 foundation level and the 2% cap and minus 9% stop-loss provisions. Priority school districts had to receive at least the same aid as in the previous year and at least 70% of their ECS entitlement.

The act also reduced the MER for towns with declining enrollments. For FY 1997-98, such towns could subtract an amount equal to their enrollment decline between October 1993 and October 1996 multiplied by 50% of the foundation level. For 1998-99, a town could subtract its enrollment decline in the prior year multiplied by 50% of the foundation level.

1998

PA 98-168 raised the foundation for FY 1998-99 from $ 5,711 to $ 5,775. It also raised the cap on maximum annual aid increases from 2% to 5% and reduced the maximum stop-loss percentage from minus 9% to minus 5%. And, beginning in FY 1998-99, it required towns to use all of any ECS aid increase for educational purposes without supplanting any local education funding.

1999

Basic Formula Factors

PA 99-217 set the base aid ratio at . 06 instead of zero, ensuring that every town receives an ECS grant. It also raised the foundation by 2% from $ 5,775 to $ 5,891 for FYs 1999-00 and 2000-01.


The act froze the welfare count for the student need weighting at the number of students on welfare (whether under Temporary Aid to Needy Families or any predecessor welfare program) in FY 1996-97. (The formula weights student counts for poverty, with each student on welfare counting as 1. 25. ) Because of the drop in the state's welfare caseload, the 1996-97 number is larger than more recent caseloads. The act thus sent additional aid to poor communities by increasing their weighted student counts.

Formula Adjustments

Caps. PA 99-217 raised the annual cap on aid increases from 5% to 6% for each year through FY 2002-03 and eliminated the cap entirely starting in FY 2003-04.

Stop-loss and Hold-Harmless. The act eliminated the minus 5% stop-loss and restored the hold-harmless for nonpriority districts, ensuring that no town received less ECS aid than it did the year before. (Priority districts already had hold-harmless protection. )

Density Supplement Hold-Harmless. PA 99-217 added a hold-harmless provision to the density supplement so no town's density supplement could fall below the supplement it received in the prior year even if its population or enrollment changed.

Priority District Alternate Minimum Grant. PA 99-217 added a third alternate minimum grant for priority school districts and made it and the two earlier ones permanent. In addition to requiring that priority districts receive grants at least equal to what they received the prior year and no less than 70% of what they would receive under the statutory ECS formula without the caps, PA 99-217 required them to receive at least the same per-student grant as in the previous year. The effect of the change was to increase aid to priority districts with rising enrollments.

Transitional District Minimum Grant. The act established a minimum grant for the 12 transitional districts (created in 1998) of no less than 40% of what they would receive under the statutory formula without the caps.

Minimum Expenditure Requirement

PA 99-217 extended the MER for two fiscal years. It required a higher MER for towns with rising enrollments and continued to allow towns to reduce MERs when enrollments fall.

For FY 1999-00, towns had to spend at least their 1998-99 MER plus any ECS aid increase and any difference in student enrollment from 1997 to 1998 multiplied by one-half the foundation. For FY 2000-01, towns had to spend at least their 1999-00 MER plus any ECS aid increase and any difference in enrollment from 1998 to 1999 multiplied by one-half the foundation.

2000

Regional Bonus

PA 00-187 increased the ECS bonus for K-12 regional school districts from $ 25 to $ 100 per student and the bonuses for regions with fewer grades by a proportional amount. The proportional amount is the ratio of the number of grades in the district to 13.

Minimum Expenditure Requirement

The act made permanent the MER calculation that requires districts to spend at least their per-pupil MER for the previous year plus the increase in their per pupil ECS aid. It also specified that, in calculating Hartford's MER, the aid increase had to include an extra $ 6 million appropriated to the district in FY 1999-00.

The act also required towns to adjust their MERs for FY 2000-01 only for decreases in enrollment between 1998 and 1999 but not for increases as previously required. Under the act, the MER for FY 2000-01 was each town's 1999-00 MER plus its ECS aid increase minus any decrease in enrollment from 1998 to 1999 multiplied by one-half the ECS foundation amount ($ 5,891).

2001

Grants to Capped Towns

PA 01-1, June Special Session, gave each town affected by the ECS cap a proportional share of $ 25 million for FY 2001-02 and of $ 50 million in FY 2002-03. Each town's share is based on the difference between its capped grant and its "target aid" (what its grant, excluding any density supplements, would be without the cap).

Minimum Grant Increase for All Towns

Under the act, for FY 2001-02, every town, whether or not it is capped, received a grant equal to at least its FY 2000-01 grant (excluding any density supplement) plus 1. 68%. For FY 2002-03, the act required every town to receive at least its FY 2000-01 grant (excluding density supplements) plus 1. 2%.

Foundation Level

The act extended the existing ECS foundation of $ 5,891 per "need student" (enrollment weighted for poverty and educational need) through FY 2002-03.

Minimum Expenditure Requirement for Waterbury

The act exempted half of any savings from Waterbury's teacher contract negotiations from the MER for FYs 2001-02 and 2002-03. It allowed the city to use half the savings for noneducational purposes if (1) overall education spending increases from the prior fiscal year and (2) the board of education keeps the other half to pay for classroom supplies and other nonpersonnel education costs.

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