School Finance: Chapter 70 Program
FY07 Chapter 70 Aid and Net School Spending Requirements
July 8, 2006
The FY07 state budget, signed into law by Governor Romney on July 8th, provides $3.506 billion in Chapter 70 state school aid for the coming year, an increase of $217 million (6.6%) over FY06. The budget also includes the first major overhaul of the Chapter 70 formula since the 1993 education reform law. These changes are the result of several years of discussions and debate, and we are very appreciative of the hundreds of municipal and school officials, parents, researchers, and others who provided valuable comments and suggestions during this process.
In particular, the new formula addresses the issue of "taxpayer equity", using updated municipal income and property data to ensure that communities of similar wealth are treated comparably. It also simplifies the calculation of state aid allotments and ensures that state aid will keep pace in districts with growing enrollments.
Here are the highlights of the new formula:
The foundation budget calculation has been simplified, with the previous 18 categories reduced to 11 categories. The new categories match the categories used by districts to report their actual spending.
Foundation budget factors are increased for inflation by 5.86%. The 4.5% cap on inflation adjustments in the old formula has been eliminated, allowing for full adjustments for inflation.
The foundation budget increment for English language learners has been increased by $50 per student, and the increment for low-income students has been increased by $25 per student.
The new formula adopts the new "aggregate wealth model" for determining required local contribution targets, with property values and personal income levels given equal weight.
The formula sets a statewide target of 59% local funding and 41% state funding of the foundation budget. For individual communities, the target percentages will vary depending on the community's wealth.
The target local contributions are capped at 82.5% of foundation budget. When fully phased in, this cap will guarantee that every district receives state aid for at least 17.5% of its foundation budget.
Chapter 70 state aid will include four components:
Foundation aid, to make up the difference between a district's foundation budget and its required local contribution.
Down payment aid, to provide districts with a share of the additional funding that they will eventually receive when the local contribution targets are fully phased in.
Growth aid, which guarantees an increase in state aid for any district whose foundation budget has increased, even if the district is already at foundation.
Minimum aid, which guarantees a small ($50 per student) increase in aid to those districts with significant enrollment declines.
Please keep in mind that many of the changes in the formula are being phased in over a period of several years, so the FY07 state aid allotments and required local contributions do not fully reflect the impact of these changes.
The Department of Elementary and Secondary Education has prepared the following materials to assist local officials in understanding the state aid calculations and local contribution requirements in the new formula:
Summary chartshowing foundation enrollment, foundation budget, Chapter 70 aid, and required local contributions for each school district.
Summary chart for regional school districts, showing foundation enrollment and required local contribution for each member of the district.
Description of the proposed changes to the foundation budget calculation
Description of the proposed changes to the required local contribution and state aid calculations
Complete formula spreadsheet, showing the detailed calculations for each municipality and district
Questions about the Chapter 70 program should be addressed to either: