1. Equalization Aid & Revenue Limits “Using Your Knowledge” WASBO “WINTER AT A GLANCE WORKSHOP” New Business Office Staff Year of Success Program Carey Bradley DPI School Finance Consultant December 1, 2015

2. Helpful Handouts Sample Districts % Method Equalization Aid 2015-16 % Method Equalization Aid October 15 Aid Certification Aid Formula Position Grid Longitudinal Equalization Aid Longitudinal Revenue Limits Files were provided before workshop. Please select your district from the dropdown, print, and bring with you or bring your computer.

3. Aid is inversely related to district property value per member. Aid is inversely related to district property value per member. One pot of money is split over 424 school districts based on district values, membership, and shared costs. Changes in individual district data affect every other district’s aid. One pot of money is split over 424 school districts based on district values, membership, and shared costs. Changes in individual district data affect every other district’s aid. Depending on district value-per-member, some districts’ aid is increased by increasing expenses, while others’ aid is decreased by increasing expenses. Depending on district value-per-member, some districts’ aid is increased by increasing expenses, while others’ aid is decreased by increasing expenses. Know where your district is in the formula and be aware of what is happening to your district over time so you can figure out why your aid has changed AND explain why. Know where your district is in the formula and be aware of what is happening to your district over time so you can figure out why your aid has changed AND explain why. Basic Equalization Aid Concepts

4. District Factors - shared cost - membership - equalized property value State Factors - cost ceilings - guaranteed valuations per member - amount of funding the State puts into the formula What affects the amount of a district’s Equalization Aid? Equalization Aid Review

5. Shared Cost is divided into 3 tiers by the Cost Ceilings How The Formula Works Primary Ceiling Secondary Ceiling

6. A percentage of shared cost aided is calculated for each tier How The Formula Works % Aided = 100% – Your Value per Member Guaranteed Value per Member at that tier

7. How The Formula Works $5.38 million Tertiary Tier 100% – = 6% $500,000 $531,951 Secondary Tier 100% – = 54% $500,000 $1,096,664 Primary Tier 100% – = 74% $500,000 $1,930,000

8. But What About Negative Aid? Primary Tier 100% – = 64% $700,000 $1,930,000 Secondary Tier 100% – = 36% $700,000 $1,096,664 Tertiary Tier 100% – =-32% $700,000 $531,951 $2.55 million

9. Positive Primary Aid Positive Secondary Aid Positive Tertiary Aid Negative Tertiary Aid Negative Secondary Aid No Aid Three Sample School Districts

13. District #1 District #2 Shared Cost $ 12,000 $ 12,000 Equalized Property $200,000 $600,000 Equalization Aid Primary $ 900 $ 900 Secondary $ 6,000 $ 2,000 Tertiary $ 1,500 $ - 1,500 Total $ 8,400 $ 1,200 70% 10% Sample District Values Per Member Equalization Aid Percent of total shared cost – not each additional dollar of cost

14. How can I find out where my district is in the aid formula? Longitudinal Data -> Equalization Aid –> Equalization Aid Formula Position Longitudinal Data -> Equalization Aid –> October 15, 2015 Equalization Aid Computation - Percentage Method Equalization Aid http://sfs.dpi.wi.gov/sfs_buddev_eq

15. What happens when a district’s value/member exceeds the guaranteed value per member? NEGATIVE AID 193 districts are negatively aided at the tertiary level because their property value/member is greater than the tertiary guarantee. Equalization Aid POP QUIZ !

16. From Gross Aid Eligibility to Actual Aid Payment (I5) Reductions/adjustments to general aid eligibility - (Lines H1 & I1 on Aid Certification): 1. Independent (“2r”) Charter Schools: cost is spread over all districts via an equal % reduction to gross general aid (equalization/special adjust/inter/intra aids). 2. Prior Year (“October to June”) adjustment: the difference in general aid amounts calculated between the October 15 th aid certification and the final aid run of the prior year (+ or – value). 3. Parental Choice Program: reduction in aid to partially offset the cost of the program – but affects Milwaukee only.

17. Special Adjustment Aid – can’t lose more than 85 % of prior year aid.

18. Value Per Member Over Time

19. How can I predict future aid amounts? Well……… Equalization Aid Worksheets -> DPI Executable -> Percentage Method….. Percentage Method….. http://www.dpi.wi.gov/sfs/index.html Uses membership, shared cost, values for simulations.

20. The change in the State’s appropriation for General Aid does NOT equal the change in any specific district’s general aid payment. Equalization Aid Odds & Ends Two-thirds NEVER meant that each district would get 66.7% of their local cost reimbursed by state aid! It was a STATE computation that added together several statewide revenue sources, (all local levies, all state and categorical aid and levy credit) and multiplied that number by 66.7%. The result of this equation was the amount put into the general aid formula. Two-thirds is no longer law.

21. Equalization Aid Recap 1.One pot of money is split over 424 school districts based on district membership, shared costs and values; changes in individual district data affect every other district’s aid. 2.Aid Membership = average of September + January FTE, plus 100% of Summer FTE. This is different from Revenue Limit Membership. 3.Depending on district value per member, some districts increase their aid by increasing expenses, while others decrease their aid by increasing expenses (negative vs. positive tertiary aid). 4.Special Adjustment Aid ensures that districts receive at least 85% of the [gross] general aid awarded the prior year. 5.Reductions for the Independent Charter schools & prior year aid adjustments impact the actual aid payment. 6.Be aware of what is happening to your district over time …

22. Revenue Limits

23. Controlled Revenues ◦ State General Aid ◦ Local property taxes (controlled levy) ◦ Department of Revenue Computer Aid Four Step Process: Step 1: Build the Base Revenue Per Member. (Worksheet lines 1-3) Step 2: Calculate New Revenue Per Member (Worksheet lines 4-7) Step 3: Determine Allowable Exemptions. (Worksheet lines 8-11) Step 4: Determine Levy & ComputerAid Amounts. The revenue limit does not include all revenues and it is not a spending limit. Membership September Pupil Count FTE Summer School FTE (40%)

25. Revenue Limits & Budget-Building Watch Change Across Time – Line 11 Total Revenue Limit with Exemptions Year 1Year 2Year 3 Line 11 represents the total amount of resource your district will get from property tax, state general aids, and exempt computer aid. This will equal about 85-95% of general fund revenues. For budgeting purposes, it’s very important to compare Line 11 with the previous year’s Line 11. Major decreases in Line 11 from year to year can have serious implications for your budget. Watch for exemptions. Total Revenue Limit with Exemptions

27. Know the Difference ! Recurring Exemptions – Permanently in Your Base Base Non-Recurring Exemptions – One Year Only Recurring This Year Next Year Base Non-Recurring Base This Year Next Year Line 8 Line 10

28. Typical Errors in Setting Levy First, type in the amounts you intend to levy for Funds 38 and 41 (lines 14B & 14C, respectively). Then, enter into line 14A the difference between line 13 and the sum of lines 14B & C. By doing this, you have levied to your maximum. Note that districts may choose to levy less than the maximum. Remember: Line 14 cannot exceed Line 13 ! If it does, you must reduce something in Line 14 (or, remain in a penalty situation). Overlevying by Computer Aid Amount

29. Typical Errors in Setting Levy Do not use Line 14, Use Line 18

30. Start the process 2016-17 Revenue Limit Base Controlled Revenues ◦ State General Aid ◦ Department of Revenue Computer Aid ◦ Local property taxes less non recurring exemptions and penalty Step 1

31. 2016-2017 Revenue Limits Four Step Process: Step 1: Build the Base Revenue Per Member. (Worksheet lines 1-3) Step 2: Calculate New Revenue Per Member (Worksheet lines 4-7) Step 3: Determine Allowable Exemptions. (Worksheet lines 8-11) Step 4: Determine Levy & Computer Aid Amounts. Estimate Fall 2016 Membership September Pupil Count FTE Summer School FTE (40%) Use the 2015-2016 Worksheet to Calculate NET 2015-2016 Base Revenue Complete steps 1-3 for estimates Line 7 hold harmless Recurring Non-recurring

32. VISIT OUR WEBSITE: sfs.dpi.wi.gov dpi.wi.govdpi.wi.gov … or CALL US (all 608 Area Code): Robert Soldner, Director ………………………….……………..266-6968 Debra Towns, Assistant Director ……………………….…. …… 267-9209 Bruce Anderson, Consultant ……………………….…………..267-9707 Carey Bradley, Consultant …………….……………………….267-3752 Dan Bush, Special Ed./Consultant ……………………….….267-9212 Victoria Chung, Accountant…………………….…………….….266-9205 Gene Fornecker, Auditor …………………………….…………..267-7882 Brian Kahl, Auditor ………………………….…………..…….……266-3862 Karen Kucharz Robbe, Consultant …….……………………..266-3464 Derek Sliter, Auditor ……………………….…………..…….…267-9218 Questions?