Correspondence tax systems grants state and school aid mandates
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Correspondence Tax Systems Grants State and School Aid Mandates. INTERGOVERNMENTAL FISCAL RELATIONS. Basic Principle of Fiscal Federalism. Geographic Matching -- decision unit coincides with beneficiaries from service provision (who also bear the burden of service provision). Tax Systems.

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Correspondence tax systems grants state and school aid mandates

Correspondence

Tax Systems

Grants

State and School Aid

Mandates

INTERGOVERNMENTAL FISCAL RELATIONS


Basic principle of fiscal federalism
Basic Principle of Fiscal Federalism

  • Geographic Matching -- decision unit coincides with beneficiaries from service provision (who also bear the burden of service provision)


Tax systems
Tax Systems

  • Federal = Income & Payroll Taxes

  • State = Sales Taxes

  • Local = Property Taxes & User Fees

Correspondence principle


Objectives of this bloc of instruction
Objectives of this bloc of instruction

  • Understand justifications for intergovernmental aid

  • Recognize types of intergovernmental aid

  • Appreciate some of the drawbacks associated with intergovernmental aid



Violations of correspondence principle
Violations of correspondence principle

  • Economies of Scale and Scope?

  • Local knowledge (better or worse)

  • Fiscal Disparity (ability to pay)

    • Overlapping jurisdictions

    • Tax limits (statutory and competitive)



Grants
Grants

  • Revenue Sharing

  • Block Grants

  • Categorical Grants

    • Formula (need contingent -- directly addressed to fiscal disparities)

    • Project (deserving -- need plus political considerations)


State school aid
State School Aid

  • Flat Grants, General, and Categorical

  • Foundation Grants

    SC = F(ADA) - c(PTB) ≥ 0

    LC = r(PTB)

    TC = F(ADA) + (r-c)(PTB), or

    SC + LC

    Where: SC = State Aid > 0, LC = Local Contribution

    F = Foundation Amount Per Pupil

    ADA = Pupils in Average Daily Attendance

    c = Computational Tax Rate, r = Actual Tax Rate

    PTB = Property Tax Base


State school aid1
State School Aid

  • Flat Grants, General, and Categorical

  • Foundation Grants

    SC = $1000(100) - 1.5%($5M),

    $25K = $100K - $75K

    LC = $150K = 3%($5M)

    TC = $175K = $100K + $75K, or

    $25K+$150K

    Where: SC =, LC = Local Contribution

    F = $1000

    ADA = 100

    c = 1.5%, r = 1%

    PTB = $5M


State school aid2
State School Aid

  • Flat Grants, General, and Categorical

  • Foundation Grants

    SC = $1000(100) - 1.5%($5M),

    $25K = $100K - $75K

    LC = $50K = 1%($5M)

    TC = $75K = $100K - $25K, or

    $25K+$50K

    Where: SC =, LC = Local Contribution

    F = $1000

    ADA = 100

    c = 1.5%, r = 1%

    PTB = $5M


State school aid3
State School Aid

  • Guaranteed Tax Base Grants

    (Percentage or Power Equalizing)

    SC = r(STB*ADA) - r(PTB)

    LC = r(PTB)

    TC = r(STB)

    STB = ADA(stb)

    Where: SC = State Aid > 0, LC = Local Contribution

    R = Locally set property tx rate

    stb = Standard Tax Base Per Per Pupil

    ADA = Pupils in Average Daily Attendance

    PTB = District Property Tax Base

    STB = Statewide Property Tax Base


State school aid4
State School Aid

  • Guaranteed Tax Base Grants

    (Percentage or Power Equalizing)

    SC = 1%($100K*100) - 1%($5M) ≥ 0,

    $50K = $100K - $50K

    LC = $50K

    TC = $100K = 1%($100K*100), or

    $50K + $50K

    Where: r = 3%

    stb = $100K

    ADA = 100

    PTB = $5M


State school aid5
State School Aid

  • Guaranteed Tax Base Grants

    (Percentage or Power Equalizing)

    SC = 3%($100K*100) - 3%($5M) ≥ 0,

    $150K = $300K - $150K

    LC = $150K

    TC = $300K = 3%(100K*100), or

    $150K + $150K

    Where: r = 3%

    stb = $100K

    ADA = 100

    PTB = $5M


State school aid6
State School Aid

  • Guaranteed Tax Base Grants

    (Percentage or Power Equalizing)

    SC = 3%($100K*100) - 3%($15M) ≥ 0,

    -$150K = $300K - $450K

    LC = $450K

    TC = $300K = 3%(100K*100), or

    -$150K + $550K

    Where: r = 3%

    stb = $100K

    ADA = 100

    PTB = $15M


State school aid7
State School Aid

  • Guaranteed Per-pupil Revenue Grants

    (Support Per Student Equalizing)

    SC = Ai(ADA) - t(PTB),

    LC = t(PTB)

    TC = Ai(sumADAi) - (t-r)(PTB)

    Where: SC = State Aid > 0, LC = Local Contribution

    Ai = Grant amount for student type I

    t = maximum allowable district tax rate

    ADA = Pupils in Average Daily Attendance

    PTB = Local Property Tax Base


State school aid8
State School Aid

  • Guaranteed Per-pupil Revenue Grants

    (Support Per Student Equalizing)

    SC = $1500(100) - 1.5%($5m),

    $150K - $75K = $75K

    LC = $75K

    TC = $150K, or $75K + $75K

    Where:

    Ai = $1500

    t = 1.5%

    ADA = 100

    PTB = $5m


State school aid9
State School Aid

  • Guaranteed Per-pupil Revenue Grants

    (Support Per Student Equalizing)

    SC = $1500(100) - 1.5%($15m),

    $150K - $225K = -$75K

    LC = $225K

    TC = $150K, or -$75K + $225K

    Where:

    Ai = $1500

    t = 1.5%

    ADA = 100

    PTB = $15m



Mandates
Mandates

  • Internalizing Externalities

  • Nationwide/Statewide uniformity in service delivery

  • Tax shifting

    Un-funded Mandates Reform Act of 1995


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