1. EQUALIZATION AID WASBO NEW SCHOOL ADMINISTRATORS & BUSINESS SUPPORT STAFF WORKSHOP Stevens Point August 17, 2007 Karen Kucharz School Finance Team

2. Finance Team….Who We Are

3. Finance Team….What We Do  Collect data reports from districts in order to distribute over $6 billion in State Aid and Credits in 2007-08, including $5.4 billion in General and Categorical Aids (Governor’s Proposal)  Provide data to individuals, organizations, state and federal agencies  Provide consultation services as needed  Provide a website and training opportunities to help people help themselves

4. Finance Team…. How We Can Help You  Web Page Publications & Tutorials  Phone calls, e-mail  Provide information via our listserv (we recommend you subscribe – see information under “Mailings/List Serve” on the green scan bar on our website)

5. How We Can Help You How We Can Help You  Spring Finance Workshops - April  State Superintendent’s Workshop - September  “Getting It Right” Workshop - October  January WASB/WASDA/WASBO Convention  Various WASBO and WASDA Seminars throughout the year

6. How We Can Help You Bookmark this page !!!!! http://dpi.wi.gov/sfs/index.html

7. Let’s Look at the Handouts…  Roadmap of the School Financial Services Website  Sample District Percentage + Full Computation Worksheets  District-Specific 06-07 Percentage Method Equalization Aid Worksheet  Slides from Power Point Presentation

8. 2007-08 EST GENERAL AID Equalization Aid $4,535,649,28098% Special Adjustment Aid $ 13,638,817.3% Inter-District Aid $ 34,392,839.7% Intra-District Aid $ 50,572,122 1% Total General Aid $4,634,253,058100%

9. Equalization Aid  Why do you need to know how to calculate aid when DPI calculates it for you? Because you will be asked by your board members, constituents and the media.Because you will be asked by your board members, constituents and the media. So you can make sure we are using the data you think we are, and, if your aid amount changes, figure out why.So you can make sure we are using the data you think we are, and, if your aid amount changes, figure out why. Because you may want to do estimates and “what ifs”…Because you may want to do estimates and “what ifs”…

10. The state’s aid formula is a guaranteed tax base, sometimes called a “power equalization” formula. Once the state “pot” of money is set, the formula uses district membership, shared cost and property value to determine aid. In theory, the higher the value of a district, the less aid it will receive. And, the more a district spends above the secondary cost ceiling, the smaller percent of the cost will get aided. Equalization Aid

11. Congratulations, it’s your lucky day! YOU ARE ELIGIBLE FOR UP TO $10,000 IN COLLEGE SCHOLARSHIP MONEY!!! (Not really. We’ll eventually connect this fake give-away to Equalization Aid.) Equalization Aid - How It Works

12. 20%80%50% Equalization Aid - How It Works

13. How Did the College “Share” in the Tuition? Compute actual scholarship amount. What you could pay.$10,000 amount. Compare, then

14. Equalization Aid Formula  State “Shares” in District Cost  Aid is Based on a District’s Ability to Pay, as Measured by Property Wealth per Member Basic premise: The more property wealth per member a district has, the less state aid it will receive.

15. How Does the State “Share” in District Costs? Compute Equalized Aid State Guaranteed Value Per Member Compare, then District Value Per Member

16. 3 District Factors 1. Costs (“Shared Cost”) 2. Wealth/Property Taxbase 3. Pupils (“Membership”) * * * All Prior-Year Data (2006-07 data is used for 2007-08 aid.)

17. Total General Fund (Fund 10) Expenditures plus (+) Total Debt Service Funds (Funds 38 & 39) Expenditures minus (-) all local misc. revenue, grant revenue, and categorical aid. Known as “Shared Cost” 1. District Factor – Costs (prior year)

18. 2. District Factor - Wealth/Taxbase (prior year) Property Taxbase is Used to Determine Wealth and Ability to Support District Expenditures Uses Equalized Valuation or Fair Market Value (NOT Assessed Value)

19. 3. District Factor – Membership (prior year) F.T.E. = full-time equivalent 2 halftime (.50) kdg students = 1 F.T.E. Average of 3rd Friday F.T.E. - September 2nd Friday F.T.E. - January plus (+) F.T.E. Summer School (2007-08 aid uses Summer 2006, September 2006, and January 2007 numbers.) Summer School = 48,600 minutes = 1 F.T.E.

20. Aid membership also includes: -Youth Challenge Students -Second Chance Partnership Students -Part-time Attendance F.T.E. of Private/Home-Schooled Students -Foster Group Home Students See: http://www.dpi.state.wi.us/sfs/membrpt2.html Membership

21. Membership Who can you count for aid membership? Generally, residents for which you are financially responsible - i.e. you are paying for the student’s education. - Start with who is in your seats on the count date. - Add in your residents who are elsewhere (and for which you are financially responsible). - Subtract non-residents being educated in your seats. - Watch for the “before and after” rule. ( (Count the student if he/she was present for instruction at least one day before the count date and at least one day after, and didn’t change residency during the period of absence.)

22. Membership Who is a Resident? Not defined by statute – residency is determined by the local district. 1.) Is the child living in the district with his/her parents? 2.) What about other situations? – there is case law - i.e. - Thayer Ruling A minor may have, for school purposes, a residence other than that of his parents. In this specific case, the school district was incidental to the child’s reason for living in the district. Use common sense…WHY are they there?

23. Who is paying for the education?  Pupil is in your seats, taught by your teachers.  Full-time resident pupils in attendance elsewhere, but your district is paying for their education. Open EnrollmentOpen Enrollment Tuition AgreementsTuition Agreements CESA ProgramsCESA Programs Tuition Waivers (Be careful with this one. These situations involve kids moving out/in of a district mid-year. Sometimes, you still can count a kid in the year that they have moved out of your district….and, sometimes you can’t count a new kid that is in your seats if a recent move has occurred. Please call us if you have a student in this situation.)Tuition Waivers (Be careful with this one. These situations involve kids moving out/in of a district mid-year. Sometimes, you still can count a kid in the year that they have moved out of your district….and, sometimes you can’t count a new kid that is in your seats if a recent move has occurred. Please call us if you have a student in this situation.)Membership

24. Crucial Statistic: Value per Member = Total Equalized Value ÷ Membership Value Per Member

25. Positive Primary Aid Positive Secondary Aid Positive Tertiary Aid Equalization Aid – 3 Levels District Value per Member 10%90% 83%17% 50% Negative Tertiary Aid Negative Secondary Aid No Aid

26. TIER 1 CALCULATION Sample District – Positive Aid 200,000 2,000,000 10.00% x $1,000 = $100.00 District 90.00% x $1,000 = $900.00 State Aid = 10.00% $900 x membership = 1 st Tier Aid $900 x 500 = $450,000 (Compare to G5)

27. TIER 2 CALCULATION Sample District – Positive Aid 200,000 1,200,000 = 16.67% 16.67% x $7,000 = $1,166.67 District 83.33% x $7,000 = $5,833.33State Aid $5,833.33 x membership = 2nd Tier Aid $5,833.33 x 500 = $2,916,667 (Compare to G10)

28. TIER 3 CALCULATION Sample District – Positive Aid 200,000 400,000 = 50.00% 50.00% x $3,000 = $1,500.00 District 50.00% x $3,000 = $1,500.00State Aid $1,500.00 x membership = 3rd Tier Aid $1,500.00 x 500 = $750,000 (Compare to G15)

29. TOTAL EQUALIZATION Sample District – Positive Aid Tier 1 = $450,000 Tier 2 = $2,916,667 Tier 3 = $750,000 Total Equalization = $4,116,667

30. COST SHARING PERCENTAGE Sample District – Positive Aid Total Equalization Aid Total Shared Cost = 74.8%$4,116,667$5,500,000

31. EQUALIZATION AID Sample District – Positive Aid The aid amount of $4,116,667 is further reduced by a deduction for the Milwaukee Charter program and any prior-year aid adjustment.

32. TIER 1 CALCULATION Sample District – Negative Aid 600,000 2,000,000 30.00% x $1,000 = $300.00 District 70.00% x $1,000 = $700.00 State Aid = 30.00% $700 x membership = 1 st Tier Aid $700 x 500 = $350,000

33. TIER 2 CALCULATION Sample District – Negative Aid 600,000 1,200,000 = 50.00% 50.00% x $7,000 = $3,500.00 District 50.00% x $7,000 = $3,500.00State Aid $3,500.00 x membership = 2nd Tier Aid $4,083.10 x 500 = $1,750,000

34. TIER 3 CALCULATION Sample District – Negative Aid 600,000 400,000 = 150.00% 150.00% x $3,000 = $4,500.00 District -50.00% x $3,000 = $-1,500.00State Aid $-1,500.00 x membership = 3rd Tier Aid $-1,500.00 x 500 = $-750,000

35. TOTAL EQUALIZATION Sample District – Negative Aid Tier 1 = $350,000 Tier 2 = $1,750,000 Tier 3 = $-750,000 Total Equalization = $1,350,000

36. COST SHARING PERCENTAGE Sample District – Negative Aid Total Equalization Aid Total Shared Cost = 32.79%$1,350,000$4,116,667

37. EQUALIZATION AID Sample District – Negative Aid The aid amount of $1,350,000 is further reduced by a deduction for the Milwaukee Charter program and any prior-year aid adjustment.

38. Positive Primary Aid Positive Secondary Aid Positive Tertiary Aid Equalization Aid – 3 Levels Negative Tertiary Aid Negative Secondary Aid No Aid

39. How can I determine where I am in the aid formula? Aid Formula Position on the Website http://www.dpi.wi.gov/sfs/index.html Under: Budget Development and Planning Equalization Aid

40. So, how does this work for my district? Percentage Method on the Website http://www.dpi.wi.gov/sfs/index.html Under: Budget Development and Planning Equalization Aid

41. How can I explain changes in my district’s aid? 7-Year History on the Website http://www.dpi.wi.gov/sfs/index.html Under: Budget Development and Planning Equalization Aid – Explaining Changes Across Time

42. How can I figure aid estimates? Simplified Percentage Method of Estimating Equalization Aid http://www.dpi.wi.gov/sfs/index.html Equalization Aid

43. Equalization Aid, Line 12 of the Revenue Limit Worksheet  On October 15, 2007, DPI will certify an amount to districts. It is the amount of aid the districts will receive in 2007-2008  We distributed the July 1 st estimate in late June. Use the July amount on line 12 of the 2007-08 revenue limit worksheet until the October Certification is issued.

44. Questions?   Visit our web site: http://dpi.wi.gov/sfs/index.html

45. Or call:   Brad Adams, Consultant, 267-3752   Lori Ames, Consultant, 266-3464   Karen Kucharz, Consultant, 267-9707   Jerry Landmark, Assistant Dir., 267-9209   Gene Fornecker, Auditor, 267-7882   Natalie Rew, Auditor, 267-9212   Kathryn Guralski, Auditor, 266-3862   David Carlson, Director, 266-6968