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Chapter 70 AidFY14 Budget7/12/2013
Massachusetts Department of Elementary and Secondary Education
2
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
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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Districts receive different levels of Chapter 70 aid, because their community’s ability to pay differs.
Tisb
ury
Natick
Littl
eton
Georg
etow
n
Norto
n
Oxfor
d
Leices
ter
Fitc
hbur
g
Lawre
nce
0%10%20%30%40%50%60%70%80%90%
100%
Local Contribution Aid
Perc
en
t of
Net
Sch
ool S
pen
din
g
Massachusetts Department of Elementary and Secondary Education
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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.
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.
PK/Hal
f Day
K
Kinde
rgar
ten-
Full
Elem
enta
ry
Juni
or/M
iddl
e
High
Schoo
l
LEP P
K/Hal
f Day
K
LEP F
ull T
ime
Vocat
iona
l
Special
Ed-
In S
choo
l
Special
Ed-
Tuiti
oned
...
Low In
com
e El
em
Low In
com
e Sec
onda
ry
$3,5
55
$7,1
10
$7,1
53
$6,7
81
$8,4
56
$4,5
44
$9,0
88
$12
,89
4 $24
,74
5
$25
,84
8
$3,3
93
$2,7
44
FY14 Foundation Rates per Pupil
Base ComponentsCosts Above the Base
Massachusetts Department of Elementary and Secondary Education
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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
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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
$2,864,809,186
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
Statewide Foundation Budget $9,711,217,585
Calculate statewide foundation budget.
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 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
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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”)
Massachusetts Department of Elementary and Secondary Education
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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.
Massachusetts Department of Elementary and Secondary Education
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Reaching the Targets Over Time
Massachusetts Department of Elementary and Secondary Education
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Reaching the Targets Over Time
Massachusetts Department of Elementary and Secondary Education
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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
Massachusetts Department of Elementary and Secondary Education
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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).
Massachusetts Department of Elementary and Secondary Education
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Reaching the Targets Over Time
Massachusetts Department of Elementary and Secondary Education
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Reaching the Targets Over Time
*FY10, 11 and 12 includes SFSF and EduJobs federal stimulus funds.