understanding the local composite index (lci) december 5, 2013

Understanding the Local Composite Index (LCI)

December 5, 2013

Average Daily Membership (ADM) Component =

Local True Values Local Adjusted Gross Income Local Taxable Retail SalesLocal ADM Local ADM Local ADM

.5 + .4 + .1

State True Values State Adjusted Gross Income State Taxable Retail SalesState ADM State ADM State ADM

Population Component =

Local True Values Local Adjusted Gross Income Local Taxable Retail SalesLocal Population Local Population Local Population

.5 + .4 + .1

State True Values State Adjusted Gross Income State Taxable Retail SalesState Population State Population State Population

Local Composite Index =

((.6667 x ADM Component) + (.3333 x Population Component)) x 0.45

COMPOSITE INDEX FUNDING FORMULA

Local Composite Index (LCI) is a wealth indicator Ratio of locality wealth per capita relative to the state

Numerators: Wealth Factors (with weights)

Real Estate Values (.5) Adjusted Gross Income or AGI (.4) Taxable Sales (.1)

Denominators: Average Daily Membership or ADM (.67) Population (.33)

Facts to Keep in Mind

Charlottesville’s LCI Decreased From .6861 to .6680

When LCI decreases, state funds increase

For 2015, there is a decrease of 1.81 percentage points, or - 2.64%

This decrease is due primarily to a relatively small increase in Charlottesville’s Adjusted Gross Income (AGI) compared to the state, relatively small decrease in real estate values compared to the state and a higher than average increase in enrollment compared to the state

Using this year’s funding formula, the decrease in the LCI increases state funding by $404,900

FACTOR % CHANGE TO FACTOR

% POINT SHARE OF LCI CHANGE

OVERALL % SHARE OF LCI

CHANGE

EFFECT ON STATE FUNDS

Local ADM

State ADM

2.00%

.91%

- .0057 - .83% $127,512

Local AGI

State AGI

1.85%

7.84%

- .0145 - 2.11% $324,367

Local Taxable Sales

State Taxable Sales

.22%

3.80%

- .0041 - .60% $91,717

Local Real Estate Values

State Real Estate Values

-0.42%

-2.79%

.0073 1.06% ($163,303)

Local Population

State Population

2.85%

2.12%

- .0011 - .16% $24,607

TOTAL - .0181 - 2.64% $404,900

Local ADM

State ADM

2.00%

.91%

- .0057 - .83% $127,512

FACTOR % CHANGE TO FACTOR

% POINT SHARE OF LCI CHANGE

OVERALL % SHARE OF LCI

CHANGE

EFFECT ON STATE FUNDS

FACTOR % CHANGE TO FACTOR

% POINT SHARE OF LCI CHANGE

OVERALL % SHARE OF LCI

CHANGE

EFFECT ON STATE FUNDS

Local ADM

State ADM

2.00%

.91%

- .0057 - .83% $127,512

Local AGI

State AGI

1.85%

7.84%

.0145 - 2.11% $324,367

FACTOR % CHANGE TO FACTOR

% POINT SHARE OF LCI CHANGE

OVERALL % SHARE OF LCI

CHANGE

EFFECT ON STATE FUNDS

Local ADM

State ADM

2.00%

.91%

- .0057 -.83% $127,512

Local AGI

State AGI

1.85%

7.84%

.0145 - 2.11% $324,367

Local Taxable Sales

State Taxable Sales

.22%

3.80%

- .0041 - .60% $91,717

FACTOR % CHANGE TO FACTOR

% POINT SHARE OF LCI CHANGE

OVERALL % SHARE OF LCI

CHANGE

EFFECT ON STATE FUNDS

Local ADM

State ADM

2.00%

.91%

- .0057 - .83% $127,512

Local AGI

State AGI

1.85%

7.84%

.0145 - 2.11% $324,367

Local Taxable Sales

State Taxable Sales

.22%

3.80%

- .0041 - .60% $91,717

Local Real Estate Values

State Real Estate Values

-.42%

-2.79%

.0073 1.06% ($163,303)

FACTOR % CHANGE TO FACTOR

% POINT SHARE OF LCI CHANGE

OVERALL % SHARE OF LCI

CHANGE

EFFECT ON STATE FUNDS

Local ADM

State ADM

2.00%

.91%

- .0057 - .83% $127,512

Local AGI

State AGI

1.85%

7.84%

.0145 - 2.11% $324,367

Local Taxable Sales

State Taxable Sales

.22%

3.80%

- .0041 - .60% $91,717

Local Real Estate Values

State Real Estate Values

-.42%

-2.79%

.0073 1.06% ($163,303)

Local Population

State Population

2.85%

2.12%

- .0011 - .16% $24,607

FACTOR % CHANGE TO FACTOR

% POINT SHARE OF LCI CHANGE

OVERALL % SHARE OF LCI

CHANGE

EFFECT ON STATE FUNDS

Local ADM

State ADM

2.00%

.91%

- .0057 - .83% $127,512

Local AGI

State AGI

1.85%

7.84%

.0145 - 2.11% $324,367

Local Taxable Sales

State Taxable Sales

.22%

3.80%

- .0041 - .60% $91,717

Local Real Estate Values

State Real Estate Values

-.42%

-2.79%

.0073 1.06% ($163,303)

Local Population

State Population

2.85%

2.12%

- .0011 - .16% $24,607

TOTAL - .0181 -2.64% $404,900

Numerators: Wealth Factors (with weights)

Real Estate (.5) Adjusted Gross Income or AGI (.4) Taxable Sales (.1)

Denominators:Average Daily Membership or ADM (.67) Population (.33)

Key Points to Remember

Relative value of real estate local to state and ADM affect the LCI the most. AGI also had a significant impact this biennium.

When the LCI decreases, state funds increase

The LCI is computed each biennium by the DOE

Understanding the Local Composite Index (LCI)

December 5, 2013