Equalization Aid&

Revenue Limits

“Using Your Knowledge”

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

Karen Kucharz RobbeDPI School Finance Consultant

December 3, 2013

Handouts

Sample % Method Equalization Aid District-Specific 2013-14 % Method Equalization

Aid District Aid Formula Position School Aid Value as % of State Average Sample Longitudinal Equalization Aid District-Specific Longitudinal Equalization Aid District-Specific October 15 Aid Certification

(Act 46) District-Specific Longitudinal Revenue Limits

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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.

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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

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0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

0 200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2,200,000

2,400,000

2,600,000

2,800,000

3,000,000

3,200,000

3,400,000

DISTRICT VALUE PER MEMBER

DIS

TR

ICT

SH

AR

ED

CO

ST

PE

R M

EM

BE

R

Positive Primary Aid

Positive Secondary

Aid

Positive Tertiary

Aid

District Value per Member

10% 90%

75%25%

50%50%Negative Tertiary Aid

Negative Secondary Aid

No Aid

Understanding/Explaining Equalization Aid

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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, 2013 Equalization Aid Computation - Percentage Method

Equalization Aid

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

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

NEGATIVE AID

181 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)

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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).

October 15th Act 46 Certification: -1.465%

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.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

0 200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2,200,000

2,400,000

2,600,000

2,800,000

3,000,000

3,200,000

3,400,000

DISTRICT VALUE PER MEMBER

DIS

TR

ICT

SH

AR

ED

CO

ST

PE

R M

EM

BE

R

Positive Primary Aid

Positive Secondary

Aid

Positive

Tertiary Aid

Negative Tertiary Aid

Negative Secondary Aid

No Aid

Understanding/Explaining Equalization Aid

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Value Per Member Over Time

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Special Adjustment Aid – can’t lose more than 85 % of prior year aid. 13

Where Can I Find Value Per Member Over Time For My

District?

Longitudinal Data –> Property Valuation –> School Aid Property Valuation

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

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Longitudinal Data -> Equalization Aid -> 10 Year Longitudinal Analysis……

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

Where Can I Find the 10-Year History For My District?

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

Equalization Aid

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

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

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

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

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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 Recap

1. 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 …18

Revenue Limits

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

Total Revenue Limit with

Exemptions

Year 1 Year 2 Year 3

Total Revenue Limit with Exemptions

Total Revenue Limit with Exemptions

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.

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2014-15 Revenue Limit Base

Enter pupil

counts - known

and 2014

estimate.

Budget Building

Revenue Limit Calculation22

Budget Planning Papers

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Longitudinal Data -> Revenue Limits ->Multi-Year Revenue Limit Survey

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

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Where Can I Find the 10-Year History For My District?

Typical Errors in Setting Levy

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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

StrategyLine 14

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Energy Efficiency ExemptionLine 10C

Remember to go back into the portal after the BOE meeting and enter the vote results.

In the referenda portal, RS – 2013 means 2013-14……differs from other database tables……

Overlevying by Energy Exemption Amount

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Energy Efficiency ExemptionLine 10C

This exemption is normally receipted and expended from Fund 10.

Put in Fund 49 ONLY if you are taking out debt to fund the project.

Each requires annual resolution by the board for the amount that will be levied to either retire the debt or to use for

energy projects expended that fiscal year.

http://sfs.dpi.wi.gov/sfs_enrgyrevlim 28

Know the Difference !

Recurring Exemptions – Permanently in Your Base

Base

Non-Recurring Exemptions – One Year Only

Recurring

This Year Next Year

Base

Base

Non-Recurring

Base

This Year Next Year

Line 8

Line 10

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If every district receives a $75 per-pupil increase, and my district has 1,000 FTE, why didn’t my revenue limit increase by

$75,000?

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

Sources of New-Year Revenue Limit

Authority

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VISIT OUR WEBSITE: sfs.dpi.wi.gov… or CALL US (all 608 Area Code):

• Robert Soldner, Director ………………………….……………..266-6968

• Erin Fath, Assistant Dir. .…………………………..…….……..267-9209

• Brad Adams, Consultant ……………………………….………..267-3752

• Bruce Anderson, Consultant ……………………….…………..267-9707

• Dan Bush, Special Ed./Consultant ……………………….….267-9212

• Victoria Chung, Accountant…………………….…………….….266-9205

• Gene Fornecker, Auditor …………………………….…………..267-7882

• Brian Kahl, Auditor ………………………….…………..…….……266-3862

• Karen Kucharz, Consultant ……………….……………………..266-3464

• Michele Tessner, Auditor …………………………………….…...267-9218

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Questions?