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Chapter 70 Aid
FY14 Budget
7/12/2013
FY14 Chapter 70 Summary
Total FY14 Chapter 70 = $4,301,214,591
Aid
• 73 districts receive foundation
aid to ensure that they do not
fall below their foundation
budgets.
•
104 districts receive aid to
phase in their target aid share.
•
203 operating districts receive
minimum aid to ensure that
they receive an increase of at
least $25 per pupil over FY13.
Foundation Budget
• No changes to foundation
budget are included.
• Inflation is set at 1.55%.
Local Contribution
• The aggregate wealth model
used since FY07 continues to be
in effect.
•
•
For municipalities with required
contributions above their targets,
the requirement is reduced by
15% of the gap.
For municipalities below their
targets, the parameters of an
additional 1% for those between
5 and 10% below and 2% for
those more than 10% below
continue.
Massachusetts Department of Elementary and Secondary Education
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Chapter 70 is the Commonwealth’s school
funding statute
A district’s Chapter 70 aid is determined in three basic steps:
1. It defines and calculates a foundation budget, an adequate
funding level for each district, given the specific grades,
programs, and demographic characteristics of its students.
2. It then determines an equitable local contribution, how
much of that “foundation budget” should be paid for by each
city and town’s property tax, based upon the relative wealth
of the community.
3. The remainder is funded by Chapter 70 (c70) state aid.
Local Contribution + State Aid = a district’s Net School
Spending (NSS) requirement. This is the minimum amount
that a district must spend to comply with state law.
Massachusetts Department of Elementary and Secondary Education
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Percent of Net School Spending
Districts receive different levels of Chapter 70 aid,
because their community’s ability to pay differs.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
4
Local Contribution
Aid
Massachusetts Department of Elementary and Secondary Education
Key Factors in School Funding Formula
Foundation Budget
• Enrollment
• Wage Adjustment
Factor
• Inflation
Local Contribution
• Property value
• Income
• Municipal Revenue
Growth Factor
These six factors work together to determine a district’s c70
aid. Both the foundation budget and local contribution are
calculated annually to reflect current local conditions.
Massachusetts Department of Elementary and Secondary Education
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Foundation budget rates reflect differences in the
cost of educating different types of students.
$2,744
$3,393
$25,848
$24,745
$12,894
$9,088
$4,544
$8,456
$6,781
$7,153
$7,110
$3,555
FY14 Foundation Rates per Pupil
6
Base Components
Massachusetts Department of Elementary and Secondary Education
Costs Above the Base
Foundation Budget
FY14 Statewide Foundation Budget by Spending Category
7
Sixty-nine percent of statewide foundation is instructional in nature.
Massachusetts Department of Elementary and Secondary Education
Local Contribution
Establishing local ability to pay
• The foundation budget is a shared municipal-state
responsibility.
• Each community has a different target local share,
or ability to pay, based on its property values and
residents’ incomes.
• Prior to this policy, required local contributions had
become less linked to ability to pay. A process was
established in 2007 to move each community from its
2006 baseline to its new target.
Massachusetts Department of Elementary and Secondary Education
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Determining each community’s target local share starts
with the local share of statewide foundation.
Foundation Budget
Calculate statewide
foundation budget.
Determine local share of
statewide foundation.
Statewide, determine
percentages that yield ½ from
property and ½ from income.
minus Local Contribution
= State Aid (“C70 aid”)
Statewide Foundation Budget
$9,711,217,585
59% Local Contribution
$5,729,618,371
Property Effort
$2,864,809,186
41% State Aid
$3,981,599,214
Income Effort
$2,864,809,186
Property and income percentages are applied uniformly across all
cities and towns to determine the combined effort yield from
property and income.
Massachusetts Department of Elementary and Secondary Education
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Individual communities’ target local shares are based on
local property values and income, and foundation budget.
• To determine local effort, first apply this year’s property
percentage (0.3557%) to the town’s 2012 total equalized
property valuation
• Then apply this year’s income percentage (1.5441%) to the
town’s 2010 total residential income
+
=
Local Property Effort
Local Income Effort
Combined Effort Yield (CEY)
• Target Local Share = CEY/Foundation budget
•
•
Capped at 82.5% of foundation
In FY14, 129 of 351 communities are capped.
Massachusetts Department of Elementary and Secondary Education
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Getting Closer To the Target Contribution
Determining the Upcoming Year’s Required Local Contribution
Preliminary Contribution
= Prior Year Contribution x Municipal Revenue Growth Factor (MRGF)
•
MRGF: Calculated annually by the Department of Revenue, it quantifies the most
recent annual percentage change in each community's local revenues, such as the
annual increase in the Proposition 2½ levy limit, that should be available for
schools
Required Contribution
•
•
Municipalities who have been required to contribute more than their target:
• Reduce by the effort reduction percent (15% in FY14).
Municipalities who have been required to contribute less than their target:
• If the preliminary contribution is below by less than 5%, the preliminary
contribution becomes the new requirement.
• If the preliminary contribution is below by more than 10%, an additional 2%
is added to the preliminary contribution. For those below by between 5 and
10%, 1% is added.
Massachusetts Department of Elementary and Secondary Education
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Each community transitions to its target local
share at a different pace.
Foundation Budget
minus Local Contribution
Framingham
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
= State Aid (“C70 aid”)
Northbridge
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
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target
required
target
required
Massachusetts Department of Elementary and Secondary Education
Reaching the Targets Over Time
Local contribution and aid targets were first defined in FY07, with a
projected five-year phase-in. Phase-in was slowed by the state revenue
crisis.
• Chapter 70 (FY14) continues the transition towards the
effort-reduction targets.
• 255 communities with required excess effort are reduced
by 15% of that excess, amounting to $35 million in lower
required contributions.
• 96 communities have required contributions below their
targets, and are moved closer by their MRGFs, plus:
• an additional 1% if below by 5 to 10% (n=25), or
• an additional 2% if below by more than 10% (n=8).
• Additional contributions total $3.8 million.
Massachusetts Department of Elementary and Secondary Education
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Reaching the Targets Over Time
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Massachusetts Department of Elementary and Secondary Education
Reaching the Targets Over Time
15
Massachusetts Department of Elementary and Secondary Education
The city or town’s required local contribution is
allocated among the districts in which it is a
member.
Town of Berkley
Foundation Budget = $11.3M
Bristol
Plymouth
14%
Somerset
Berkley
25%
Bristol
County
2%
Berkley
59%
Required Local Contribution = $5.3M
Bristol
Plymouth
14%
Somerset
Berkley
25%
Bristol
County
2%
Berkley
59%
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Allocation is in direct proportion to the share of its total foundation
budget.
Massachusetts Department of Elementary and Secondary Education
FY14 Chapter 70 Aid Calculation
•
Start with prior year’s aid
•
•
Add together the prior year’s aid and the
required local contribution (Row 1 and 3). If
the combined amount is minus than foundation
budget:
•
•
•
Foundation aid provides additional funding for
districts to spend at foundation levels (Row 4).
73 operating districts
If the district’s combined effort yield as a
percent of foundation budget is less than 140%,
and it receives less than its target aid share:
•
•
•
FY13 c70 (statewide: $4.173B)
Target aid phase-in provides 25% of the
difference between their target aid share and their
Chapter 70 aid share.
104 operating districts
If it is greater than foundation budget:
•
•
Chapter 70 aid is held harmless at the prior
year’s level.
District receives at least $25 per pupil in additional
aid over FY13 (203 operating districts).
Massachusetts Department of Elementary and Secondary Education
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Reaching the Targets Over Time
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Massachusetts Department of Elementary and Secondary Education
Reaching the Targets Over Time
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*FY10, 11 and 12 includes SFSF and EduJobs federal stimulus funds.
Massachusetts Department of Elementary and Secondary Education