Location:
EDUCATION - FINANCE;
Scope:
Connecticut laws/regulations;

OLR Research Report


February 9, 2012

 

2012-R-0101

EDUCATION COST SHARING FORMULA

By: John Moran, Principal Analyst

You asked for a description of the Education Cost Sharing (ECS) formula including (1) the formula components and how they work and (2) a brief history of recent changes to it.

SUMMARY

ECS aid is the major form of state education aid to Connecticut's towns. For FY 12, the current fiscal year, the state is distributing $1.89 billion in state ECS aid to towns (that equals 45.3% of all state education expenditures). The budget act (PA 11-6) passed last year overrode the statutory formula for calculating ECS grants and specified each town's ECS grant for FY 12 and FY 13. In doing so, it held funding at the current level, marking the fourth consecutive year that ECS funding was frozen.

The ECS formula is intended to equalize state education funding to towns by taking into account a town's wealth and ability to raise property taxes to pay for education. Poor towns receive more aid per student; affluent towns receive less aid per student. The components of the formula that drive this equalization will be discussed in more detail below.

The basic ECS formula multiplies the number of students in each school district (weighted for educational need) by the amount the state has determined a district should spend to provide an adequate education (the “foundation”) and by an aid percentage determined by the district's wealth. The result is the district's ECS grant. The law then imposes minimum or base aid for all towns and adds supplements for such things as students attending regional school districts.

The formula has rarely been fully funded in its 23-year history. Over the years there have been attempts to phase in full funding when state revenues were strong, but financial downturns and related budget issues have often led to interrupting the phase-in and freezing or reducing funding levels.

In addition to significantly revamping the formula in 1995 and 2007, the legislature has made some adjustment to it nearly every year since it was created. While its primary components remain intact, the cumulative effects of previous aid caps, minimum aid amounts, and out-of-date data elements continue to affect the funds' distribution.

ECS funding was frozen at the FY 09 level in FY 10 and FY 11. The current state budget calls for ECS funding to continue at the FY 09 level through FY 13.

For a summary of the formula's components see Attachment A. For a table showing each town's ECS grant amounts for FY 12 and 13, see Attachment B.

THE ECS BASIC FORMULA

The ECS formula has three main parts that are multiplied together:

1. the number of students each town is educating adjusted to compensate for educational and economic need;

2. a “foundation” amount representing the level of per-need-student spending that state aid helps towns achieve, which is, ideally, the amount necessary to provide an adequate education to each student; and

3. a base aid ratio (or percentage) representing the relationship between (a) each town's wealth (measured by equalized grand list adjusted for income) and (b) a state guaranteed wealth level (GWL).

Except for the foundation, which is currently set by state law, the basic formula incorporates various subformulas, which are briefly described below. Each of the subformulas relies on data derived from various sources from various years.

Of the three subformulas, the two that affect how much aid a town gets in relationship to the state's other towns are (1) the number of students and “need students,” and (2) town wealth, which is used as part of the base aid ratio. For need students, low-income students are weighted more heavily, using an income measurement, than non-low income students. This way less affluent towns receive more aid per student. Regarding town wealth, if a town is wealthy relative to other towns, it will receive less aid per student.

Formula Components

1. Students and “Need Students.” The student factor starts with the number of regular and special education students enrolled in public schools at town expense (“resident students”) on October 1 in the year before the grant year (“resident students”). This number is adjusted for the district's number of school days over the statutory 180-day minimum and then weighted for educational and economic need, by increasing a town's resident student counts for students in certain categories to yield a “need student” count.

This subformula, in turn, uses the following two factors to weight student counts for educational need.

a. Each student from a low-income family who is eligible for federal assistance under Title I of the Elementary and Secondary Education Act as of each October 1 counts an extra 33%.

b. Each limited-English-proficient (LEP) student not participating in bilingual education programs counts an extra 15%.

2. Foundation. The ECS foundation is set by state law at $9,687 per-need-student.

3. Town Wealth. Each town's relative wealth is determined by an average of its property tax base and its residents' income. The property tax base is the total of its taxable real and personal property at 100% of market value, averaged over three years. The property tax base is measured on both a per-student (with the number weighted for need) and per-capita basis. Income is measured on a per-capita and median-household basis and each town's income is compared to that of the highest-income town in the state.

State Guaranteed Wealth Level (GWL). The ECS formula is designed to allow towns to tax themselves to raise a portion of the foundation based on an equalized tax burden, with the state making up any difference between what a town can raise and the foundation, up to the state guaranteed wealth level. The GWL is 75% above the wealth of the median town. A higher GWL increases the state's share of total education funding.

Other Factors

Minimum Aid. To avoid having towns whose wealth is higher than the GWL get no state aid, the ECS formula establishes a minimum base aid ratio of 0.09 for most towns and 0.13 for the 20 school districts with highest concentrations of low-income students. The ratio is the relationship between a town's wealth and the foundation. Thus, grants for the wealthiest towns (known as “minimum aid towns”) are either 9% of the foundation amount for each need student or, for wealthier towns with a high proportion of low-income students, 13%.

Regional Bonus. Towns receive a bonus of $100 for each student enrolled in a K-12 regional district and proportionately lower bonuses for students enrolled in regional districts encompassing grades 7-12 and 9-12.

THE ECS FORMULA SINCE 2007

The last major changes in the ECS formula were enacted in the 2007 special legislative session and took effect July 1, 2007.

PA 07-3, June Special Session, changed the formula to (1) increase the level of per-student spending ECS aid helps towns achieve, (2) provide a higher level of minimum aid, (3) increase student need weightings for poverty and limited-English, and (4) use a more up-to-date measure of student poverty weighting.

That same law simplified the formula and its subformulas by eliminating supplemental aid to towns based on poverty concentrations and higher-than-average population densities. It also eliminated a factor that provided additional aid for low-achieving students. The same act phased in increased state aid, specifying minimum percentage increases of 4.4% each year for FY 08 and FY 09.

The budget acts of 2009 and 2011 each overrode the statutory ECS formula and specified each town's ECS grants for the four years from FY 10 through FY 13. Each town's grant was held constant for each year. Thus, although the ECS formula has not functioned since FY 09, the amount each town gets today is set according to the amount the ECS formula produced three years ago.

Freezing the ECS amount for each town means that changes in student population and other data changes since then are not taken into account. Also, when the formula last functioned for the 2009 entitlements, it was still using town income data from the 2000 Census. The U.S. Census bureau was no longer conducting a mid-decennial income survey. Furthermore, starting in 2010, the Census Bureau is no longer gathering income data.

JM:ro

Attachment A

The ECS Formula

Fully Funded ECS Grant = (Base Aid Ratio x Foundation x Need Students) + Regional Bonus

Base Aid Ratio = Greater of: (a) 1 minus Town Wealth State Guaranteed Wealth Level (1.75 times the median town wealth) or (b) 0.09 (9 %) for most towns and 0.13 (13%) for towns ranked in top 20 according to Title I Count Population aged 5-17

Town Wealth = (((ENGL Need Students + ENGL Population)) 2) x (((PCI HPCI) + (MHI HMHI)) 2)

ENGL = Equalized net grand list (three-year average) (CT Office of Policy & Management, Average: 2003/2004/2005)

PCI = Per capita income (U.S. Census Bureau, 1999)

HPCI = PCI for town with highest PCI in the state (U.S. Census Bureau, 1999)

MHI = Median household income (U.S. Census Bureau, 1999)

HMHI = MHI for town with highest MHI in the state (U.S. Census Bureau, 1999)

Population = Total town population (U.S. Census Bureau, 2005)

Need Students = See below

Foundation = $9,687

Need Students = Resident Student Count + 33% of Poverty Count + 15% LEP Count

Resident student count = Students enrolled in public schools at town expense on the preceding October 1, adjusted for school days under or over 180 in the school year, plus 50% of town students participating in Open Choice (State Department of Education, October 2007)

Poverty count = Number of children aged 5 to 17 from families in poverty as determined under Title I of federal No Child Left Behind Act as of each October 1 (State Department of Education, 2005)

LEP Count = Number of limited-English-proficient students not participating in state-funded bilingual education programs (State Department of Education, October 2006)

Regional Bonus = $100 per resident student enrolled in K-12 regional districts, $46.15 for each student enrolled in a 7-12 district, and $30.77 for each student enrolled in a 9-12 district

Attachment B

ECS (equalization aid) Grant Amounts by Town

Town

Grant for Fiscal Year 2012

Grant for Fiscal Year 2013

Andover

2,330,856

2,330,856

Ansonia

15,031,668

15,031,668

Ashford

3,896,069

3,896,069

Avon

1,232,688

1,232,688

Barkhamsted

1,615,872

1,615,872

Beacon Falls

4,044,804

4,044,804

Berlin

6,169,410

6,169,410

Bethany

2,030,845

2,030,845

Bethel

8,157,837

8,157,837

Bethlehem

1,318,171

1,318,171

Bloomfield

5,410,345

5,410,345

Bolton

3,015,660

3,015,660

Bozrah

1,229,255

1,229,255

Branford

1,759,095

1,759,095

Bridgeport

164,195,344

164,195,344

Bridgewater

137,292

137,292

Bristol

41,657,314

41,657,314

Brookfield

1,530,693

1,530,693

Brooklyn

6,978,295

6,978,295

Burlington

4,295,578

4,295,578

Canaan

207,146

207,146

Canterbury

4,733,625

4,733,625

Canton

3,348,790

3,348,790

Chaplin

1,880,888

1,880,888

Cheshire

9,298,837

9,298,837

Chester

665,733

665,733

Clinton

6,465,651

6,465,651

Colchester

13,547,231

13,547,231

Colebrook

495,044

495,044

Columbia

2,550,037

2,550,037

Cornwall

85,322

85,322

Coventry

8,845,691

8,845,691

Cromwell

4,313,692

4,313,692

Danbury

22,857,956

22,857,956

Darien

1,616,006

1,616,006

Deep River

1,687,351

1,687,351

Derby

6,865,689

6,865,689

Durham

3,954,812

3,954,812

Eastford

1,109,873

1,109,873

East Granby

1,301,142

1,301,142

East Haddam

3,718,223

3,718,223

East Hampton

7,595,720

7,595,720

East Hartford

41,710,817

41,710,817

East Haven

18,764,125

18,764,125

East Lyme

7,100,611

7,100,611

Easton

593,868

593,868

East Windsor

5,482,135

5,482,135

Ellington

9,504,917

9,504,917

Enfield

28,380,144

28,380,144

Essex

389,697

389,697

Fairfield

3,590,008

3,590,008

Farmington

1,611,013

1,611,013

Franklin

941,077

941,077

Glastonbury

6,201,152

6,201,152

Goshen

218,188

218,188

Granby

5,394,276

5,394,276

Greenwich

3,418,642

3,418,642

Griswold

10,735,024

10,735,024

Groton

25,374,989

25,374,989

Guilford

3,058,981

3,058,981

Haddam

1,728,610

1,728,610

Hamden

23,030,761

23,030,761

Hampton

1,337,582

1,337,582

Hartford

187,974,890

187,974,890

Hartland

1,350,837

1,350,837

Harwinton

2,728,401

2,728,401

Hebron

6,872,931

6,872,931

Kent

167,342

167,342

Killingly

15,245,633

15,245,633

Killingworth

2,227,467

2,227,467

Lebanon

5,467,634

5,467,634

Ledyard

12,030,465

12,030,465

Lisbon

3,899,238

3,899,238

Litchfield

1,479,851

1,479,851

Lyme

145,556

145,556

Madison

1,576,061

1,576,061

Manchester

30,619,100

30,619,100

Mansfield

10,070,677

10,070,677

Marlborough

3,124,421

3,124,421

Meriden

53,783,711

53,783,711

Middlebury

684,186

684,186

Middlefield

2,100,239

2,100,239

Middletown

16,652,386

16,652,386

Milford

10,728,519

10,728,519

Monroe

6,572,118

6,572,118

Montville

12,549,431

12,549,431

Morris

657,975

657,975

Naugatuck

29,211,401

29,211,401

New Britain

73,929,296

73,929,296

New Canaan

1,495,604

1,495,604

New Fairfield

4,414,083

4,414,083

New Hartford

3,143,902

3,143,902

New Haven

142,509,525

142,509,525

Newington

12,632,615

12,632,615

New London

22,940,565

22,940,565

New Milford

11,939,587

11,939,587

Newtown

4,309,646

4,309,646

Norfolk

381,414

381,414

North Branford

8,117,122

8,117,122

North Canaan

2,064,592

2,064,592

North Haven

3,174,940

3,174,940

North Stonington

2,892,440

2,892,440

Norwalk

10,095,131

10,095,131

Norwich

32,316,543

32,316,543

Old Lyme

605,586

605,586

Old Saybrook

652,677

652,677

Orange

1,055,910

1,055,910

Oxford

4,606,861

4,606,861

Plainfield

15,353,204

15,353,204

Plainville

10,161,853

10,161,853

Plymouth

9,743,272

9,743,272

Pomfret

3,092,817

3,092,817

Portland

4,272,257

4,272,257

Preston

3,057,025

3,057,025

Prospect

5,319,201

5,319,201

Putnam

8,071,851

8,071,851

Redding

687,733

687,733

Ridgefield

2,063,814

2,063,814

Rocky Hill

3,355,227

3,355,227

Roxbury

158,114

158,114

Salem

3,099,694

3,099,694

Salisbury

187,266

187,266

Scotland

1,444,458

1,444,458

Seymour

9,836,508

9,836,508

Sharon

145,798

145,798

Shelton

4,975,852

4,975,852

Sherman

244,327

244,327

Simsbury

5,367,517

5,367,517

Somers

5,918,636

5,918,636

Southbury

2,422,233

2,422,233

Southington

19,839,108

19,839,108

South Windsor

12,858,826

12,858,826

Sprague

2,600,651

2,600,651

Stafford

9,809,424

9,809,424

Stamford

7,978,877

7,978,877

Sterling

3,166,394

3,166,394

Stonington

2,061,204

2,061,204

Stratford

20,495,602

20,495,602

Suffield

6,082,494

6,082,494

Thomaston

5,630,307

5,630,307

Thompson

7,608,489

7,608,489

Tolland

10,759,283

10,759,283

Torrington

23,933,343

23,933,343

Trumbull

3,031,988

3,031,988

Union

239,576

239,576

Vernon

17,645,165

17,645,165

Voluntown

2,536,177

2,536,177

Wallingford

21,440,233

21,440,233

Warren

99,777

99,777

Washington

240,147

240,147

Waterbury

113,617,182

113,617,182

Waterford

1,445,404

1,445,404

Watertown

11,749,383

11,749,383

Westbrook

427,677

427,677

West Hartford

16,076,120

16,076,120

West Haven

41,399,303

41,399,303

Weston

948,564

948,564

Westport

1,988,255

1,988,255

Wethersfield

8,018,422

8,018,422

Willington

3,676,637

3,676,637

Wilton

1,557,195

1,557,195

Winchester

7,823,991

7,823,991

Windham

24,169,717

24,169,717

Windsor

11,547,663

11,547,663

Windsor Locks

4,652,368

4,652,368

Wolcott

13,539,371

13,539,371

Woodbridge

721,370

721,370

Woodbury

876,018

876,018

Woodstock

5,390,055

5,390,055

Source: PA 11-6