ECS DATA AND FUNDING ALLOCATIONS

You asked (1) if the state will be using up-to-date Census data in the Education Cost Sharing (ECS) formula calculations for FY 2004-05, (2) how much impact the new data has on the formula given other ECS funding constraints, and (3) how the state has allocated ECS funding for FYs 2001-02 through 2004-05.

The state is using data from the 2000 Census to calculate future ECS grant entitlements, as is required by state law. But the data changes will have little, if any, effect on actual ECS grants to towns, because ECS money is not currently being distributed through the ECS formula. Over the past few years, the General Assembly has relied on across-the-board and proportional changes in prior years’ grants rather than the formula to allocate ECS funding. In addition, because under current law each town’s ECS grant for next year is the same as it was this year, the formula is irrelevant for FY 2004-05.

There are three ECS formula factors that depend on Census data: population, per capita income, and median household income. The law requires the state to use numbers from the most recent decennial

Census or, if more recent and available on January 1 of the fiscal year two years before the payment year, interim figures issued by the Commerce Department (CGS §10-262f).

In FY 2004-05, the ECS formula will include population figures from 2000 and per capita and median household income figures from 1999. All of these data elements are used in the ECS town wealth calculation. But the changes will have no effect on town grants because FY 2004-05 ECS grants for all towns are frozen at FY 2003-04 levels.

Because the Census data is used in the wealth calculations, changes in data affect towns’ relative positions in the ECS wealth ranking, which affects both the town’s overall grant and the calculation of its ECS cap.

After each district’s ECS grant is calculated according to the formula, current law limits annual aid increases to 6%. This limit is called a “cap. ” Actual caps can be less than 6% because they are calculated based on wealth. If a town’s wealth is at or below that of the90th percentile town, which is the town ranked 153^rd when all 169 towns are ranked from highest to lowest wealth, it has the highest cap (+6%). All towns ranked as wealthier than the 153^rd town have caps lower than 6%. Consequently, if data changes reduce a town’s wealth ranking, its cap would be higher and it could receive a bigger grant increase. But, if a town’s grant is capped, the cap itself would still be likely to have a bigger impact on its grant than any changes in data due to the Census.

According to the Office of Fiscal Analysis, incorporating 2000 Census data into the ECS calculations would increase the total cost of FY 2004-05 ECS grants by $ 70 million in the absence of the cap.

Since 2001, the legislature has not used the ECS formula to determine ECS grants. Rather, it has allocated annual ECS appropriations through across-the-board percentage increases (or decreases) in prior year grants and supplemented these by proportional distributions of specified amounts of money to capped towns. Thus, the data used in the ECS formula, while not entirely irrelevant, has become less important in the grant distribution.

For FY 2001-02, the General Assembly gave every town an ECS grant equal to at least its prior year’s grant, excluding any density supplement, plus 1. 68%. In addition, each town affected by the ECS cap received a proportional share of $ 25 million for FY 2001-02 based on the difference between its capped grant and what its grant, excluding any density supplements, would be without the cap (PA 01-1, June Special Session).

For FY 2002-03, every town received at least its FY 2000-01 grant (excluding density supplements) plus 1. 2%. Each capped town also received a proportional share of $ 50 million for FY 2002-03 (PA 01-1, June Special Session). The General Assembly later amended this plan to hold all towns harmless from decreases in state education aid in FY 2002-03, thus ensuring that no town received less ECS aid in that year than it did in FY 2001-02 (PA 02-6, May 9 Special Session).

In adopting ECS funding for FY 2003-04, the General Assembly, among other things:

1. eliminated the ECS density supplement, which gave additional money to towns with population densities higher than the state average;

2. eliminated the hold-harmless provision for priority school districts;

3. distributed a total of $ 53 million proportionately to capped towns;

4. reduced each town’s FY 2003-04 grant, including the cap supplement, by 3%;

5. required FY 2003-04 grants to Bridgeport, Hartford, and New Haven to at least equal their prior year’s grant plus $ 1 million;

6. required FY 2003-04 grants to the following to at least equal their prior year’s grant: priority and transitional districts and districts eligible for priority and transitional district phase-out grants; and

7. gave all towns except Bridgeport, Hartford, and New Haven a proportional share of remaining ECS appropriations (PA 03-6, June 30 Special Session).

Under current law, ECS grants for FY 2004-05 are frozen at 2003-04 levels (PA 03-6, June 30 Special Session).


April 13, 2004		2004-R-0395
ECS DATA AND FUNDING ALLOCATIONS

By: Judith Lohman, Chief Analyst