Equalization Aid – Behind the Scenes

Brent Richter, Director of Business Services,

Lodi School DistrictKaren Kucharz Robbe, Finance

Consultant,School Financial Services Team, DPI

Educational Objectives

Greater Understanding of the Equalization Aid Formula Components That Affect the Amount of Your Aid

Negative Tertiary Aid and What You Can Do About It (!)

2

Handouts

A. July 1 2018-15 General Aid Certification

- Abbotsford School District - District-Specific

B. Longitudinal Equalization Aid

- Linn J6 - Bayfield - Sun Prairie

- Appleton - District-Specific

C. Power Point Slides

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2,000,000

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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

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CO

ST

PE

R M

EM

BE

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Positive Primary Aid

Positive Secondary

Aid

Positive Tertiary

Aid

District Value per Member

Negative Tertiary Aid

Negative Secondary Aid

No Equalization Aid

Equalization Aid Review from August 14, 2014

Presentation

Let’s Focus on Shared Cost

3 District Factors

Wealth (Property Tax Base)

Number of Students to Educate (Membership)

Shared Cost (Revenues and Expenditures)

General Fund (10)

Debt Service Funds (38 & 39)

Capital Projects Fund (41)

(only certain aidable expendituresas determined by DPI)

Plus, a few extra items.Equal Aid calc uses prior-year data, so any

significant changes in your expense/revenue pattern will take 1 year to have an effect on

Shared Cost/Equalization Aid.

Fund Inputs for Shared Cost

Expenditures that are funded byTaxes (Source 210), Computer Aid (Source 691),

General Aid (Source 620), or Fund Balance.

Shared Cost “Working Definition”

Expenditures

Revenues

Revenues Removed

– i.e. Deducted

(not an exhaustive list)

All State and Federal Grant Revenues Tuition Revenue Earnings on Investments Gate Receipts Fees & Fines Federal and State Aid Transits E-Rate Refunds

Fund 10 Deductible Receipts

Deductible receipts are deducted from total expenditures as part of the process to get to

shared cost.

Taxes-Src 210 (includes levy 211, chargebacks 212, mobile home fees 213, TIF closeouts 219) Computer Aid-Src 691 General State Aid-Src 620 (includes High Poverty Aid) Property Tax and Equalization Aid Refund-Src 972

Impact Aid Non-Deductible (DPI-computed amount) Reorganization Settlement-Src 850 Long Term Operational Borrowing-Src 873, 874

Fund 10 Non-Deductible Receipts

Expenditures made from the following revenue sources ARE in

shared cost:

Local Property

Tax43%

Local Misc. Receipts

1%Other Misc.3%

State General

Aid44%

Categor-ical

State Aid3%

Federal Aid5%

General Fund (10)Revenues

Getting to Fund 10 Deductible ReceiptsBy Subtracting Non-Deductible Receipts

Local Property

Tax98%

Misc Local Revenue

2%

Debt Service Funds (38 & 39) Net Cost

Debt Service Shared Cost

Refinancing is Shared Cost-Neutral.

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3,400,000

DISTRICT VALUE PER MEMBER

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Positive Primary Aid

Positive Secondary

Aid

Positive Tertiary

Aid

District Value per Member

Negative Tertiary Aid

Negative Secondary Aid

No Equalization Aid

Equalization Aid

How Shared Cost Changes Depends on Which Piece Changes and By How Much

Expenditures

Revenues

D

N D

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

#1: Revenues remain unchanged. Expenses are increased.

D D

N D

Shared

Cos t

Fund 10Scenario #1 - Before

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

All revenues unchanged. Expenses increased. Shared cost increases.

D D

N D

Shared

Cos t

Fund 10Scenario #1 - After

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

2

Scenario #2: Add tuition revenue (deductible receipt). Expenses unchanged.

D D

N D

Shared

Cos t

Fund 10Scenario #2 - Before

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

Added tuition revenue (deductible receipts). Expenses unchanged.Shared cost is reduced.

DD

N D

Shared

Cost

Fund 10Scenario #2 - After

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

Scenario #3: Add tuition revenue. Add equal expense.

D D

N D

Shared

Cos t

Fund 10Scenario #3 - Before

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

Added tuition revenue, expenditures increased by equal amount. No change in shared cost.

D D

N D

Shared

Cos t

Fund 10Scenario #3 - After

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

Scenario #4: New High Poverty Aid (or any other non-deductible). Don’t add any expense.

D D

N D

Shared

Cos t

Fund 10Scenario #4 - Before

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

Added High Poverty Aid, deductible receipts unchanged. Expenses unchanged. No shared cost change.

DD

N D

Shared

Cos t

Fund 10Scenario #4 - After

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

Scenario #5: New High Poverty Aid (any non-deductible), expenditures increased by equal

amount.

D D

N D

Shared

Cos t

Fund 10Scenario #5 - Before

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000

$0

Added High Poverty Aid revenue (or another non-deductible), deductible receipts unchanged. Expenses increased. Increase in

shared cost.

D D

N D

Shared

Cos t

Fund 10Scenario #5 - After

RevenuesNo

ChangeDeductible Receipts

Non-DeductibleReceipts

Expenditur

es

No Change

Increase/Decrease

------

Incr Exp - Increase Shared Cost Decr Exp - Decrease Shared Cost

Increase Reduce Shared Cost Decrease Increase Shared Cost

Chng in Revs = Chng in Exp No Effect Chng in Revs > Chng in Exp Reduce Shared Cost Chng in Revs < Chng in Exp Increases Shared Cost

Increase No Effect Decrease No Effect

Chng in Revs = Chng in Exp SC Change = Exp ChangeChng in Revs > Chng in Exp SC Change = Exp Change Chng in Revs < Chng in Exp SC Change = Exp Change

All other things remaining equal.

Shared Cost Changes

Equalization Aid

3 State Factors

Cost Ceilings

Guaranteed Property Valuations Per Member

Amount of Money to Distribute

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DISTRICT VALUE PER MEMBER

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Positive Primary Aid

Positive Secondary

Aid

Positive Tertiary

Aid

District Value per Member

Negative Tertiary Aid

Negative Secondary Aid

No Equalization Aid

Equalization Aid

“Multi-Year Longitudinal Analysis of General and Equalization Aid Formula Components”

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

Location: SFS Homepage > Longitudinal Data > Equalization Aid

Your Aid and the Big Picture

Longitudinal Analysis

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DISTRICT VALUE PER MEMBER

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Positive Primary Aid

Positive Secondary

Aid

Positive Tertiary

Aid

District Value per Member

Negative Tertiary Aid

Negative Secondary Aid

No Equalization Aid

Equalization Aid

Equalization Aid

Knowing your district’s specific profile and where you are headed in the aid formula will help you better explain how changes in local

finances might affect your state aid.

What if we

underspend

our budget?

How does

that affect

our aid?

If we go to referendum, how will our aid change?

Shared Cost/Aid Changes

“2014-15 Equalization Aid Worksheet”

Location: SFS Homepage > Worksheets > DPI Executable

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

2014-15 Equalization Aid Worksheet

Special Adjustment Aid

2013-14 Final Aid Eligibility*

Equalization Aid (Line H1)

$914,004

Inter-District (Line I1)

$0

Intra-District (Line I1)

$0

Special Adjustment (Line I1)

$31,833

Total $945,837

X .85

85% Minimum for 2014-15

$803,961

2014-15 Aid Eligibility*

Equalization Aid (Line H1)

$523,943

Inter-District (Line I1) $0

Intra-District (Line I1) $0

Special Adjustment (Line I1)

$280,018

Total $803,961

X .85

85% Minimum for 2015-16

$683,367

Special Adjustment Aid ensures the district receives at least 85% of the prior year’s General

Aid eligibility.

* Prior to Choice/Charter Deductions.

Bruce Anderson, Consultant 608-267-9707Carey Bradley, Consultant 608-267-3752Dan Bush, Consultant 608-267-9212Karen Kucharz Robbe, Consultant 608-266-3464Gene Fornecker, Auditor 608-267-7882Michele Gundrum, Auditor 608-267-9218Brian Kahl, Auditor 608-266-3862Vacant, Assistant Director 608-267-9209Bob Soldner, Director 608-266-6968

Email: dpifin@dpi.wi.govPhone: (608) 267-9114 Fax:(608)

266-2840