Budget Development and Planning - Equalization Aid Tools

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Understanding and Explaining Equalization Aid

Want to understand the Equalization Aid formula? Ever have the need to explain it to someone new to Wisconsin public school finance?

Wisconsin’s Equalization Aid formula distributes financial assistance to school districts to achieve two basic policy goals: (1) reduce the reliance upon the local property tax as the sole source of revenue for educational programs; and (2) guarantee that a basic educational opportunity is available to all pupils regardless of the local fiscal capacity of the district in which they reside.

For these reasons, Equalization Aid is intended to make up the differences between a district’s actual tax base and the state guaranteed tax base. Simply stated, there is an inverse relationship between equalization aid and property valuations; those districts with low, per-pupil property valuations receive a larger share of their costs reimbursed through the equalization formula than districts with high, per-pupil property valuations. When a district’s per-pupil property value exceeds the state guarantee, “negative aid” is generated.

The Equalization Aid formula can best be understood by simplifying the computation to basic percentages. Although this is not the method prescribed in statute, it very closely approximates actual computations and is very useful for pedagogical or projection purposes. (In some cases, the totals differ only by a few dollars.)

The following two links both present the formula in "percentage" terms. The first link presents the computation in an algebraic format (all numbers), and the second link presents the computation with bar graphs.

October 15, 2007 Equalization Aid Computation – Percentage Method - Algebraic Format

October 15, 2007 Equalization Aid Computation – Percentage Method - Bar Graphs

For a detailed description of the Equalization Aid formula, please consult pages 7-12 in “Elementary and Secondary School Aids,” written by the Legislative Fiscal Bureau.

Please call finance consultant if you have further questions.

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Explaining Equalization Aid Changes

Changes in a district’s demographics (membership, property value per pupil, shared cost, and other factors) can cause greater-than-normal “shifts” in a district’s Equalization Aid from year to year. Use this longitudinal Excel spreadsheet to review key factors in your district’s Equalization Aid computation and determine the reasons behind aid changes. Also provided are Excel graphs of select data elements. Please contact a Finance Consultant if you need assistance interpreting this data.

Longitudinal Equalization Aid Spreadsheet

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2007-2008 Equalization Aid Formula Position

The following Excel graphs were developed to provide a quick visual snapshot of a district's general position in the Equalization Aid formula. Two (2) district variables, shared cost per member and value per member, are plotted in the graphs below. Further, the State guaranteed value per member and cost ceiling amounts are superimposed onto the district data. By observing the position of district variables in relation to the state variables, users can determine the general level of state support provided to the district by the Equalization Aid formula. (positive aid, negative aid, etc.)

Plots are based on the type of school district - K-12, K-8, and UHS (Union High School).

Aid Formula Position K-8

Aid Formula Position UHS

Aid Formula Position K-12

For a mathematical look at a specific district's Equalization Aid computation, see October 15, 2007 Equalization Aid Computation – Percentage Method.

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For questions about this information, contact dpifin@dpi.wi.gov (608) 267-9114

Last updated on 6/30/2008 2:15:35 PM