OLR Research Report

June 27, 2006




By: Judith Lohman, Chief Analyst

You asked for an explanation of the 2005 law that imposes a penalty on local school districts that use increases in Education Cost Sharing (ECS) grants to supplant local funding for education. You also asked how the law is enforced.


State law requires towns to spend 100% of their ECS aid for educational purposes. In addition, starting with FY 1999, towns may not use increases in annual ECS funding to supplant local education funding (CGS 10-262i(c)). This latter provision is the non-supplant requirement.

Before 2005, the State Department of Education (SDE) did not monitor towns for compliance with the no-supplant requirement. But, in 2005, the General Assembly made the non-supplant prohibition more explicit by requiring the budgeted education appropriation of any town that receives an increase in ECS funding be at least equal to the amount the town appropriated for education in the previous year plus the ECS increase (PA 05-245). This requirement makes it easier for SDE to tell when a town has used an ECS grant increase for noneducation purposes.

The 2005 act also imposes a penalty on any town with a K-12 school district or any regional school district that the State Board of Education (SBE) finds has violated the non-supplant requirements in any fiscal year. The penalty requires the town or regional district to forfeit twice the amount of any shortfall. The SDE must withhold the penalty from the town's ECS grant or, in the case of towns in a regional school district, from the member towns' ECS grants in proportion to their relative numbers of resident students enrolled in the regional school district.

The 2005 law allows SBE to waive the penalty, but not the spending requirement, (1) if the town or regional district agrees to increase its budgeted education appropriation for the year in which the forfeiture would occur by at least the forfeiture amount or (2) for good cause. If the district agrees to spend additional funds to avoid forfeiture, the extra funds do not count towards any future minimum expenditure requirement.


To enforce the minimum budget requirement law, SDE requires school superintendents to file a Form ED 012 each August. SDE fills in the change in the district's ECS grant. If the ECS grant has not increased, the law does not apply. If there is an increase, the superintendent must fill in the education appropriation from the town's approved annual budget for the prior fiscal year, adjusted for any supplemental appropriations or changes in the approved budget, and its budgeted education appropriation for the current year. Expenditures for land purchases, capital building activity, and debt service are not included. The difference between the two budget appropriations must be at least equal to the ECS increase.

A copy of the SDE's Form ED 012 for FY 2005-06 and the instructions for the form are attached to this report.