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Estimate Your Own Equalization Aid

Overview

As districts develop budgets or consider referenda, part of that process is "guesstimating" future aid amounts. While no one can predict aid to any strong degree of certainty, there are a few basic ideas that can be considered when approximating what might happen.

Equalization Aid is the largest "General Aid" program in Wisconsin and comprises approximately 97 percent of the state "General Aid" total. State "General Aid" also includes Inter-/Intra-District Aid (state general aid to districts for pupil transfers resulting from a plan to reduce racial imbalance) and Special Adjustment Aid (state general aid that ensure districts receive at least 85 percent of the previous year’s state general aid).

Click the appropriate link below for more information.

General Aid Numbers Throughout the Year

Each year, DPI is required by law to provide General Aid numbers on July 1 (an estimate), October 15 (certification to be used in district Revenue Limit computations) and Final Aid Eligibility. UNLIKE some categorical aid programs which are based on a per-pupil count and/or a flat-dollar aid amount, state General Aid is computed by taking into account data elements from ALL public school districts at the same time in one computer run. So, an exact determination of how a certain district’s aid will increase or decrease from the prior year can only be determined by a DPI aid run.

Until one is available, it is important to note that aid changes are usually caused by three main reasons:

  • magnitude of the shifting of the individual local district data elements;
  • what is happening with the same data elements in the rest of the public districts in the state; and
  • what is happening with the appropriation (pot of state money to be distributed as General Aid).

Therefore, estimating Equalization Aid is complex.

Aid Scenarios

Equalization Aid is determined by both local district and statewide factors. Local factors include district membership, district property value and district shared cost. Statewide factors include the shared cost ceilings and property value guarantees. To run aid scenarios, districts will need to gather estimates for both the local and state factors. The three local factors the district will need to gather are membership, shared cost and property value.

Membership

Aid Membership is defined as the "average of the prior-year September and January FTE (including Challenge Academy, Part-Time Attendance, and Foster Group Home counts) plus Summer FTE." So, for example, the Summer, 2015, September, 2015 and January 2016 membership information will be used in the 2016-17 General Aid calculation.

District FTE Membership can be found on the district’s SAFR Reporting Portal homepage and is calculated from district-submitted reports on file at DPI. Select "FTE Reports" from the bulleted list, then appropriate FTE Conversion link.

Shared Cost

Shared Cost can be generally defined as the sum of the net cost of the general fund and the net cost of the debt service fund from prior-year financial reports (see Chapter 121.07(6)(a) of the Wis. Stats. for the exact definition of shared cost.) So, for example, financial data from the 2015-16 fiscal year will be used in the 2016-17 General Aid calculation.

District Shared Cost can be found on the district’s SAFR Reporting Portal homepage and is calculated from district-submitted financial reports on file at DPI. Select "Financial Data Home" from the bulleted list, then the appropriate financial report (Annual or Budget) and the correct year. Once you are into the report, click on "Shared Cost" on the left-hand navigation bar. Note that this Shared Cost report does not include estimates for Lines B4-Non-Deductible State Aid, D8-Aidable Fund 41 Expenditures and E2-Transportation of Indigent Pupils, which will need to be incorporated (usually, prior-year amounts are reasonable estimates).

If you are running a referenda scenario, remember to include in shared cost the eligible additional cost attributable to the referendum.

Property Value

The property valuation used in General Aid computations is the prior-year May, School-Aid Certification. So, for example, the 2015 property valuation (TIF-OUT + Computer Value) certified in May, 2016 will be used in the 2016-17 General Aid computation.

Estimation Factors

Estimating the state factors (cost ceilings and property value guarantees) is much more complex and unpredictable because the district data to be used in a future aid run is not yet known. The best indicator is to look at a Formula Factor History to observe the statewide trends across time. In this file, there are six statewide factors to observe--here are the known variables:

  • The General Aid Appropriation is set at $4,584,098,000 for 2016-17.
  • The $1,930,000 K-12 Primary Guarantee and $1,000 Primary Cost Ceiling are in statute, requiring legislative action to change. They will remain the same for the 2016-17 aid runs.

Here are the unknown variables to be estimated:

  • The Secondary Ceiling (reflecting statewide district costs) increases anywhere from about $80 to $150 each year.
  • The Secondary Guarantee is determined by the amount of funding the State appropriates to General Aid.
  • The Tertiary Guarantee is based on statewide property valuation and statewide total membership.

Simplified Equalization Aid Method for Estimating Aid

Districts will need to estimate these factors when projecting future aid amounts. Once estimates for the state factors are identified and local factors have been determined, an aid scenario can be run (download a blank Simplified Equalization Aid Method for Estimating Aid).

In this worksheet, first indicate your district type: 1, 2, or 3 in cell B12. Then, fill in your three local factors and your estimated numbers for the State Secondary Cost Ceiling, Secondary Guarantee and Tertiary Guarantee. Finally, enter a negative number for the Charter Deduction and the district-specific Prior-Year Aid adjustment (district-specific amount taken from the prior-year final aid run--this can be positive or negative). Note that Milwaukee should also estimate a deduction for Choice. Be sure to consider the resulting aid amount AN ESTIMATE until a DPI aid run becomes available and you can make comparisons.

Another Approach

Given the uncertainty of predicting future amounts for statewide variables, another approach would be to load the district's most recent October 15 Aid Certification (containing actual cost ceilings and guarantees) into the simulation spreadsheet and add the additional referenda shared cost to the computation to determine the aid amount "if the referenda would have already been in place." While this method is also inexact, it does use known variables.

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