Chapter 70 Aid

Chapter 70 AidFY14 Budget7/12/2013

Massachusetts Department of Elementary and Secondary Education

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FY14 Chapter 70 Summary

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.

Total FY14 Chapter 70 = $4,301,214,591


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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.


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Districts receive different levels of Chapter 70 aid, because their community’s ability to pay differs.

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George

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Norton

Oxford

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10%20%30%40%50%60%70%80%90%

100%

Local Contribution Aid

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Key Factors in School Funding FormulaFoundation 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.


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Foundation budget rates reflect differences in the cost of educating different types of students.

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$3,5

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$7,1

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$7,1

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$6,7

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$8,4

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$4,5

44

$9,0

88

$12,

894 $2

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$25,

848

$3,3

93

$2,7

44

FY14 Foundation Rates per Pupil

Base ComponentsCosts Above the Base


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Foundation BudgetFY14 Statewide Foundation Budget by Spending Category

Sixty-nine percent of statewide foundation is instructional in nature.


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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.

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Determining each community’s target local share starts with the local share of statewide foundation.

Foundation Budget minus Local Contribution = State Aid (“C70 aid”)

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

$2,864,809,186Income 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.


Statewide Foundation Budget $9,711,217,585

Calculate statewide foundation budget.


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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.


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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.


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Each community transitions to its target local share at a different pace.

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

0%20%40%60%80%

100%Framingham

targetrequiredLinear (required)

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

0%20%40%60%80%

100%Northbridge

targetrequiredLinear (required)

Foundation Budget minus Local Contribution = State Aid (“C70 aid”)


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Reaching the Targets Over Time

• 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.

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.


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The city or town’s required local contribution is allocated among the districts in which it is a member.

Allocation is in direct proportion to the share of its total foundation budget.

Town of Berkley

Berkley59%Somerset

Berkley25%

Bristol Plymouth

14%Bristol County

2%

Foundation Budget = $11.3M

Berkley59%Somerset

Berkley25%

Bristol Plymouth

14%Bristol County

2%

Required Local Contribution = $5.3M


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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).


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*FY10, 11 and 12 includes SFSF and EduJobs federal stimulus funds.

Documents

Chapter 70 Aid