Chapter 70 school funding overview

7/27/2019 Chapter 70 school funding overview

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Chapter 70Massachusetts School FundingFormula


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Massachusetts School Revenues FY00-FY12(in billions)

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Chapter 70 is the Commonwealths school fundingstatute

A districts Chapter 70 aid is determined in three basic steps:

1. It defines and calculates a foundation budget, an adequatefunding level for each district, given the specific grades,programs, and demographic characteristics of its students.

2. It then determines an equitable local contribution, howmuch of that foundation budget should be paid for by eachcity and towns property tax, based upon the relative wealthof the community.

3. The remainder is funded by Chapter 70 (c70) state aid.

Local Contribution + State Aid = a districts Net SchoolSpending (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 communitys ability to pay differs

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0%

10%

20%

30%

40%50%

60%

70%

80%

90%100%

P

ercentofNetSchoolSpending

Local Contribution Aid

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Key Factors in School Funding Formula

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Foundation Budget

Enrollment

Wage AdjustmentFactor

Inflation

Local Contribution

Property value

Income

Municipal RevenueGrowth Factor

These six factors work together to determine a districts c70aid.

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Foundation BudgetFY14 Foundation Rates per Pupil

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Average Foundation Rate is $10,352 per pupil.

$3,555

$7,110

$7,153

$6,781

$8,456

$4,544

$9,088

$12,894 $2

4,745

$25,848

$3,393

$2,744

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Foundation BudgetFY14 Statewide Foundation Budget by Spending Category

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

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General Fund Expenditures Compared to theFoundation Budget

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0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

FY12 foundation budget per pupil

FY12 general fund spending per pupil

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Local ContributionEstablishing local ability to pay

The foundation budget is a shared municipal-stateresponsibility.

Each community has a different target local share,or ability to pay, based on its property values andresidents incomes.

Prior to this policy, required local contributions had

become less linked to ability to pay. A process wasestablished in 2007 to move each community from its2006 baseline to its new target.

Massachusetts Department of Elementary and Secondary Education

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Determining each communitys target local share startswith the local share of statewide foundation.

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Determine local share of

statewide foundation.

59% Local Contribution

$5,729,618,371

41% State Aid

$3,981,599,214

Statewide, determinepercentages that yield fromproperty and from income.

Property Effort0.3557%

$2,864,809,186

Income Effort1.5441%

$2,864,809,186

Property and income percentages are applied uniformly across allcities and towns to determine the combined effort yield from

property and income.


Statewide Foundation Budget$9,711,217,585

Calculate statewidefoundation budget.


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Individual communities target local shares are based onlocal property values and income, and foundationbudget.


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To determine local effort, first apply this years propertypercentage (0.3557%) to the towns 2012 total equalizedproperty valuation

Then apply this years income percentage (1.5441%) to the

towns 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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Local ContributionExample Target Local Share Calculation

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82 DUXBURY

Effort Goal

1) 2012 equalized valuation 3,466,188,400

2) Property percentage 0.3557%

3) Local effort from property wealth 12,330,369

4) 2010 income 998,898,000

5) Income percentage 1.5441%

6) Local effort from income 15,423,875

7) Combined effort yield (row 3+ row 6) 27,754,244

8) Foundation budget FY14 28,443,468

9) Maximum local contribution (82.5% * row 8) 23,465,861

10) Target local contribution (lesser of row 7 or row 9) 23,465,861

11) Target local share (row 10 as % of row 8) 82.50%

12) Target aid share (100% minus row 11) 17.50%


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Getting Closer To the Target ContributionDetermining the Upcoming Years Local Contribution

Preliminary Contribution

Increase last years required local contribution by the municipalitys MunicipalRevenue Growth Factor (MRGF)

Calculated annually by the Department of Revenue

Quantifies the most recent annual percentage change in each community's localrevenues, such as the annual increase in the Proposition 2 levy limit, that should be

available for schools

Required Contribution

If the preliminary contribution is above the target, reduce by the effort reductionpercent (15% in FY14).

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 and10%, 1% is added.

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Local ContributionExample Required Local Contribution Calculation

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82 DUXBURY

FY14 Increments Toward Goal

13) Required local contribution FY13 24,315,649

14) Municipal revenue growth factor (DOR) 3.59%

15) FY14 preliminary contribution (13 x 14) 25,188,581

16) Preliminary contribution pct of foundation (15/8) 88.56%

If prel im in ary contri bu tion i s above the target share:

17) Excess local effort (15 - 10) 1,722,720

18) 15% reduction toward target (17 x 15%) 258,408

19) FY14 required local contribution (15 - 18), capped at row 8 24,930,173

20) Contribution as percentage of foundation (19 / 8) 87.65

If prel im inary co ntr ibu t ion is below the target share:

21) Shortfall from target local share (11 - 16)

22) Added increment toward target (13 x 1% or 2%)*

*1% if shortfall is between 5% and 10%; 2% if shortfall > 10%

23) Shortfall from target after adding increment (10 - 15 - 22)

24) FY14 required local contribution (15 + 22 )

25) Contribution as percentage of foundation (24 / 8)


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Reaching the Targets Over Time

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Chapter 70 (FY14) continues the transition towards thelocal contribution and aid targets.

255 communities with required excess effort are reducedby 15% of that excess, amounting to $35 million in lowerrequired contributions.

96 communities have required contributions below theirtargets, 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 revenuecrisis.


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Reaching the Targets Over TimeHanson

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49.90% 49.72% 48.22% 48.59% 46.77% 48.97% 49.71% 49.73%

28.06% 29.32% 29.03%32.94% 34.39%

36.03% 36.97%38.76%

0%

10%20%

30%

40%

50%

60%

70%

80%

90%

100%

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14

Target & Required Local Contribution Percentages

target required


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Reaching the Targets Over TimePembroke

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58.75% 57.05% 56.15% 54.83% 55.44% 56.00% 56.42% 56.81%

59.41% 57.26% 56.52% 54.93%57.11% 58.12% 58.04% 58.54%

0%

10%20%

30%

40%

50%

60%

70%

80%

90%

100%



target required


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Reaching the Targets Over TimeDuxbury

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82.50% 82.50% 82.50% 82.50% 82.50% 82.50% 82.50% 82.50%

89.59%86.84%

84.13% 83.48%87.85% 89.22% 87.48% 87.65%

0%

10%20%

30%

40%

50%

60%

70%

80%

90%

100%



target required


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Progress Toward Target Contributions

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Progress Toward Target Contributions

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Regional AllocationExample: Berkley

The city or towns required local contribution is allocatedamong the districts in which it is a member.

This is based upon the share of its total foundation budget.

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Town of Berkley

Berkley

59%Somerset

Berkley

25%

Bristol

Plymouth

14%

Bristol

County

2%

Foundation Budget = $11.3M

Berkley

59%Somerset

Berkley

25%

Bristol

Plymouth

14%

Bristol

County

2%

Required Local Contribution = $5.3M


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Calculating Chapter 70 Aid

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Start with prior years aid, and add newly

calculated required local contribution (Row 1 and3). FY13 c70 (statewide: $4.173B)

If the combined amount is less than foundationbudget:

Foundation aid provides additional funding fordistricts to spend at foundation levels (Row 4).

73 operating districts

If it is greater than foundation budget: Chapter 70 aid is held harmless at the prior years

level.

If the districts combined effort yield as a percentof 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 theirChapter 70 aid share.

104 operating districts

District receives at least $25 per pupil in additional aidover FY13 (203 operating districts).

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780 WHITMAN HANSON

Aid Calculation FY14

Prior Year Aid

1 Chapter 70 FY13 23,680,501

Foundation Aid

2 Foundation budget FY14 38,579,785

3 Required district contribution FY14 14,560,975

4 Foundation aid (2 -3) 24,018,810

5 Increase over FY13 (4 - 1) 338,309

6 Target aid (Target aid share x row 2) 20,520,588

7 Combined Effort Yield % of Fnd 46.82%

8 Target aid phase-in (6-1+5) x 25% 0

9 Minimum $25 per pupil increase 0

Non-Operating District Reduction to Foundation

10 Reduction to foundation 0

FY14 Chapter 70 Aid

11sum of line 1, 5, 8 and 9 minus 10 24,018,810


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Progress Toward Target Aid Share

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Progress Toward Target Aid Share

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Net School Spending v. Actual NSS

Net School Spending (NSS)

Chapter 70 Aid

+ Required Local ContributionDistricts NSS Requirement

NSS requirement islegal funding obligationfor each district. Remains fully in effect

and will be enforced Aid penalties result from

non-compliance

Actual NSS

Computed each yearfrom each districts Endof Year Financial Report Includes operating

expenditures Includes municipal

indirect costs such asinsurance, maintenanceand administration

Excludes non-appropriated funds suchas grants and revolvingfunds

Excludes capital spending

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Most Districts Spend in Excess of Their Net SchoolSpending Requirement

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Below95%

95-99.5 %99.5-

100.5%100.5-105%

105-120%Above120%

FY11 3 16 13 34 117 145

FY12 4 20 11 39 99 152

FY13 2 18 11 32 111 150

0

20

40

6080

100

120

140160

NumberofOpe

ratingDistricts


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Chapter 70 Websitehttp://finance1.doe.mass.edu/chapter70/

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FY14link

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Chapter 70 Contact Info

Melissa King, 781-338-6532,[email protected]

Roger Hatch, 781-338-6527,[email protected]

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mailto:[email protected]:[email protected]:[email protected]:[email protected]

Documents

Chapter 70 school funding overview