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Chapter 70 Aid

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.

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Chapter 70 Aid

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  1. Chapter 70 Aid FY14 Budget 7/12/2013

  2. 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

  3. Chapter 70 is the Commonwealth’s school funding statute A district’s Chapter 70 aid is determined in three basic steps: • 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. • 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. • 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

  4. Districts receive different levels of Chapter 70 aid, because their community’s ability to pay differs. Massachusetts Department of Elementary and Secondary Education

  5. 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

  6. Foundation budget rates reflect differences in the cost of educating different types of students. Base Components Massachusetts Department of Elementary and Secondary Education Costs Above the Base

  7. Foundation BudgetFY14 Statewide Foundation Budget by Spending Category Sixty-nine percent of statewide foundation is instructional in nature. Massachusetts Department of Elementary and Secondary Education

  8. Local ContributionEstablishing 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

  9. Determining each community’s target local share starts with the local share of statewide foundation. Calculate statewide foundation budget. Statewide Foundation Budget $9,711,217,585 Determine local share of statewide foundation. 59% Local Contribution $5,729,618,371 41% State Aid $3,981,599,214 Statewide, determine percentages that yield ½ from property and ½ from income. Property Effort $2,864,809,186 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

  10. 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

  11. Getting Closer To the Target ContributionDetermining 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

  12. Each community transitions to its target local share at a different pace. Massachusetts Department of Elementary and Secondary Education

  13. 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

  14. Reaching the Targets Over Time Massachusetts Department of Elementary and Secondary Education

  15. Reaching the Targets Over Time Massachusetts Department of Elementary and Secondary Education

  16. The city or town’s required local contribution is allocated among the districts in which it is a member. Town of Berkley Allocation is in direct proportion to the share of its total foundation budget. Massachusetts Department of Elementary and Secondary Education

  17. FY14 Chapter 70 Aid Calculation • Start with prior year’s aid • FY13 c70 (statewide: $4.173B) • 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: • 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

  18. Reaching the Targets Over Time Massachusetts Department of Elementary and Secondary Education

  19. Reaching the Targets Over Time *FY10, 11 and 12 includes SFSF and EduJobs federal stimulus funds. Massachusetts Department of Elementary and Secondary Education

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