Equalization Aid&

Revenue Limits

“Using Your Knowledge”

WASBO “WINTER AT A GLANCE WORKSHOP”New Business Office Staff Year of Success Program

Carey BradleyDPI School Finance Consultant

December 1, 2015

Helpful Handouts Sample Districts % Method Equalization Aid 2015-16 % Method Equalization Aid October 15 Aid Certification Aid Formula Position Grid Longitudinal Equalization Aid Longitudinal Revenue Limits

Files were provided before workshop. Please select your district from the dropdown, print, and bring with you or bring your computer.

Aid is inversely related to district property value per member.

One pot of money is split over 424 school districts based on district values, membership, and shared costs. Changes in individual district data affect every other district’s aid.

Depending on district value-per-member, some districts’ aid is increased by increasing expenses, while others’ aid is decreased by increasing expenses.

Know where your district is in the formula and be aware of what is happening to your district over time so you can figure out why your aid has changed AND explain why.

Basic Equalization Aid Concepts

District Factors- shared cost- membership - equalized property value

State Factors- cost ceilings- guaranteed valuations per member- amount of funding the State puts into the

formula

What affects the amount of a district’s Equalization Aid?

Equalization Aid Review

1,000 members$0

$2,500

$5,000

$7,500

$10,000

$12,500

Primary SecondaryTertiary

Shared Cost isdivided into3 tiers by theCost Ceilings

How The Formula Works

Primary Ceiling

Secondary Ceiling

A percentage ofshared cost aidedis calculated foreach tier

How The Formula Works

% Aided = 100% –

YourValue per Member

GuaranteedValue per Member

at that tier

1,000 members$0

$2,500

$5,000

$7,500

$10,000

$12,500

Primary SecondaryTertiary

1,000 members$0

$2,500

$5,000

$7,500

$10,000

$12,500

Primary SecondaryTertiary

How The Formula Works

$5.38 million

Tertiary Tier 100% – = 6%

$500,000 $531,951

Secondary Tier

100% – = 54%$500,000$1,096,664

Primary Tier

100% – = 74%$500,000$1,930,000

1,000 members$0

$2,500

$5,000

$7,500

$10,000

$12,500

Primary SecondaryTertiary

But What About Negative Aid?

Primary Tier

100% – = 64%$700,000$1,930,000

Secondary Tier

100% – = 36%$700,000$1,096,664

Tertiary Tier

100% – =-32%$700,000$531,951

$2.55 million

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,00011,00012,00013,00014,00015,000

DIS

TRIC

TSH

ARED

CO

ST P

ER M

EMB

ER

DISTRICT VALUE PER MEMBER

Positive Primary Aid

Positive Secondary

Aid

Positive

Tertiary Aid

Negative Tertiary Aid

Negative Secondary Aid

No Aid

Three Sample School Districts

posaid.xps

District #1 District #2Shared Cost $ 12,000 $ 12,000Equalized Property $200,000 $600,000

Equalization Aid Primary $ 900 $ 900 Secondary $ 6,000 $ 2,000Tertiary $ 1,500 $ - 1,500Total $ 8,400 $ 1,20070% 10%

Sample District Values Per Member

Equalization Aid

Percent of total shared

cost – not each

additional dollar of cost

How can I find out where my district is in the aid formula?

Longitudinal Data -> Equalization Aid –> Equalization Aid Formula Position

Longitudinal Data -> Equalization Aid –> October 15, 2015 Equalization Aid Computation - Percentage Method

Equalization Aid

http://sfs.dpi.wi.gov/sfs_buddev_eq

What happens when a district’s value/member exceeds the guaranteed value per member?

NEGATIVE AID

193 districts are negatively aided at the tertiary level because their property value/member is

greater than the tertiary guarantee.

Equalization AidPOP QUIZ !

From Gross Aid Eligibility to Actual Aid Payment (I5)

Reductions/adjustments to general aid eligibility - (Lines H1 & I1 on Aid Certification):

1. Independent (“2r”) Charter Schools: cost is spread over all districts via an equal % reduction to gross general aid (equalization/special adjust/inter/intra aids).

2. Prior Year (“October to June”) adjustment: the difference in general aid amounts calculated between the October 15th aid certification and the final aid run of the prior year (+ or – value).

3. Parental Choice Program: reduction in aid to partially offset the cost of the program – but affects Milwaukee only.

Special Adjustment Aid – can’t lose more than 85 % of prior year aid.

Value Per Member Over Time

04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

♦ District ■ State Ave

District Value per Member Compared to the State Average

How can I predict future aid amounts?Well………

Equalization Aid

Worksheets -> DPI Executable -> Percentage Method…..

http://www.dpi.wi.gov/sfs/index.html

Uses membership, shared cost, values for simulations.

The change in the State’s appropriation for General Aid does

NOT equal the change in any specific district’s general aid payment.

Equalization Aid Odds & Ends

Two-thirds NEVER meant that each district would get 66.7% of their local cost reimbursed by state aid!

It was a STATE computation that added together several statewide revenue sources, (all local levies, all state and

categorical aid and levy credit) and multiplied that number by 66.7%. The result of this equation was the amount put

into the general aid formula.

Two-thirds is no longer law.

Equalization Aid Recap1. One pot of money is split over 424 school districts based on

district membership, shared costs and values; changes in individual district data affect every other district’s aid.

2. Aid Membership = average of September + January FTE, plus 100% of Summer FTE. This is different from Revenue Limit Membership.

3. Depending on district value per member, some districts increase their aid by increasing expenses, while others decrease their aid by increasing expenses (negative vs. positive tertiary aid).

4. Special Adjustment Aid ensures that districts receive at least 85% of the [gross] general aid awarded the prior year.

5. Reductions for the Independent Charter schools & prior year aid adjustments impact the actual aid payment.

6. Be aware of what is happening to your district over time …

Revenue Limits

Revenue LimitsControlled Revenues◦ State General Aid

◦ Local property taxes (controlled levy)

◦ Department of Revenue Computer Aid

Four Step Process:Step 1: Build the Base Revenue

Per Member. (Worksheet lines 1-3)

Step 2: Calculate New Revenue Per Member

(Worksheet lines 4-7) Step 3: Determine Allowable

Exemptions.(Worksheet lines 8-11)

Step 4: Determine Levy & ComputerAid Amounts.

The revenue limit does not include all revenues and it is not a spending limit.

Membership• September Pupil Count

FTE• Summer School FTE

(40%)

Revenue Limits & Budget-BuildingWatch Change Across Time – Line 11

Total Revenue Limit with

Exemptions

Year 1 Year 2 Year 3

Line 11 represents the total amount of resource your district will get from property tax, state general aids, and exempt computer aid. This will equal about 85-95% of general fund revenues.

For budgeting purposes, it’s very important to compare Line 11 with the previous year’s Line 11. Major decreases in Line 11 from year to year can have serious implications for your budget. Watch for exemptions.

Total Revenue Limit with

ExemptionsTotal Revenue

Limit with Exemptions

Know the Difference !Recurring Exemptions –

Permanently in Your Base

Base

Non-Recurring Exemptions – One Year Only

RecurringThis Year Next Year

Base

Base

Non-Recurring

Base

This Year Next Year

Line 8

Line 10

Typical Errors in Setting Levy

First, type in the amounts you intend to levy for Funds 38 and 41 (lines 14B & 14C, respectively).

Then, enter into line 14A the difference between line 13 and the sum of lines 14B & C.

By doing this, you have levied to your maximum. Note that districts may choose to levy less than the maximum.

Remember: Line 14 cannot exceed Line 13 ! If it does, you must reduce something in Line 14 (or, remain in a penalty situation).

Overlevying by Computer Aid Amount

Typical Errors in Setting LevyDo not use Line 14, Use Line 18

Start the process 2016-17 Revenue Limit Base

Controlled Revenues

◦ State General Aid◦ Department of

Revenue Computer Aid

◦ Local property taxes less non recurring exemptions and penalty

Step 1

2016-2017 Revenue Limits

Four Step Process:Step 1: Build the Base Revenue

Per Member. (Worksheet lines 1-3)

Step 2: Calculate New Revenue Per Member

(Worksheet lines 4-7)

Step 3: Determine Allowable Exemptions.

(Worksheet lines 8-11)

Step 4: Determine Levy & Computer Aid Amounts.

Estimate Fall 2016 Membership• September Pupil Count FTE• Summer School FTE (40%)

Use the 2015-2016 Worksheet to Calculate NET 2015-2016 Base Revenue

Complete steps 1-3 for estimates

Line 7 hold harmlessRecurringNon-recurring

VISIT OUR WEBSITE: sfs.dpi.wi.gov… or CALL US (all 608 Area Code):• Robert Soldner, Director ………………………….……………..266-

6968• Debra Towns, Assistant Director ……………………….…. ……

267-9209• Bruce Anderson, Consultant ……………………….…………..267-

9707• Carey Bradley, Consultant …………….……………………….267-

3752• Dan Bush, Special Ed./Consultant ……………………….….267-

9212• Victoria Chung, Accountant…………………….…………….….266-

9205 • Gene Fornecker, Auditor …………………………….…………..267-

7882• Brian Kahl, Auditor ………………………….…………..…….……

266-3862• Karen Kucharz Robbe, Consultant …….……………………..266-

3464• Derek Sliter, Auditor ……………………….…………..…….…267-

9218

Questions?