Connecticut's Education C Sharing (ECS) Grant: History, Formula &Challenges Education Cost Sharing Task Force September 15, 2011 Prepared by the State Department of Education, Office of Fiscal Analysis, Legislative Commissioners' Office, Office of Legislative Research, and Office of Policy and Management PLAINTIFFS' TRIAL EXHIBIT No X07 HHD-CV11-5031565-s 1 of 21 CONFIDENTIAL 234 FINLEY000026_0001 Education Funding Background: Court Decisions ■ Horton v. Meskill (1977): CT Supreme Court ruled that public education was a state responsibility and each child had the right to an equal opportunity to receive a suitable educational experience. ■ It ruled that a system of school financing that relied on local property tax revenues without regard to disparities in town wealth and lacked significant equalizing state support was unconstitutional. 2 2 of 21 CONFIDENTIAL FINLEY000026_0002 Education Funding Background: Court Decisions ■ The Court found that this funding system ensured that more educational dollars were allotted to children who lived in property-rich towns than to children in property-poor towns. This enabled property-rich towns to offer a wider range and higher quality of education programs than other towns. ■ The decision also held that it is up to the legislature, not the courts, to devise a constitutional system for education financing. 3 3 of 21 CONFIDENTIAL FINLEY000026_0003 Education Funding Background: Court Decisions & State Responses ■ The Legislature responded to the Horton decision by enacting the first major education equalization funding formula, the Guaranteed Tax Base (GTB) grant. The GTB was the early version of the Education Cost Sharing (ECS) formula. ■ The State Board of Education and an education finance advisory group launched an 18-month study into education finance reform that would recommend as a long-range goal that the state provide aid "at least equal to local revenues" for public elementary and secondary education. 4 4 of 21 CONFIDENTIAL FINLEY000026_0004 Education Funding Background ■ In 1989-90, the ECS grant replaced the GTB grant (Public Acts 88-358 and 89-124). ■ In Sheff v. O'Neill (1996) the CT Supreme Court ruled that racial and ethnic isolation of Hartford students deprived them of their constitutionally guaranteed right to an equal educational opportunity. The decision did not involve the distribution of state education aid. 5 5 of 21 CONFIDENTIAL FINLEY000026_0005 Education Funding Background: The Myth of the 50/50 Funding Promise ■ A report issued by the State Board of Education after Horton suggested a goal of 50 percent state funding, but neither the General Assembly nor any of the five governors who have served since 1979 have made the 50 percent goal an explicit part of any state budget or proposed budget. ■ Many individual legislators have introduced bills to enact a 50 percent funding plan, but none have ever been favorably reported out of a committee or adopted in a budget. 6 6 of 21 CONFIDENTIAL FINLEY000026_0006 Education Funding Background: CCJEF v. Reit, the Adequacy Ruling ■ In Connecticut Coalition for Justice in Education Funding (CCJEF) v. Rell (2010) the CT Supreme Court ruled the state constitutional right to education requires that public schools provide students an adequate education. The court did not precisely define adequacy and did not address whether the current system was adequate. The court sent the case back to the Superior Court for trial to determine what is adequate and whether CT provides an adequate educational system. 7 7 of 21 CONFIDENTIAL FINLEY000026_0007 Impact of Equalization 2011-12 ECS Grants per Resident Student summarized by ECS Town Wealth Rank. Each grouping contains 24 towns sorted by wealth rank. Group 4 contains 25 towns. Wealth Groupings ECS Entitlement per Resident Student 1 (Wealthiest) 2 3 4 5 6 7 (Poorest) $378 735 1,720 2,744 3,125 4,586 6,860 State Average $3,472 8 8 of 21 CONFIDENTIAL FINLEY000026_0008 Summary of 2008-09 State Share of Public Elementary and Secondary Education Expenditure Percent of Total Education Cost Sharing (ECS) Grant Capital Grant Programs Teachers' Retirement Other State Grants SDE Leadership and Education Program Supports CT Technical High School System Other State School Districts All Other $1,889,182,288 693,888,946 588,832,792 583,794,195 45.3% 16.6% 14.1% 14.0% 147,811,644 140,270,505 94,794,799 34,984,699 3.5% 3.4% 2.3% 0.8% Total State Share $4,173,559,868 100.0% 9 9 of 21 CONFIDENTIAL FINLEY000026_0009 Percentages of Local, State, Federal and Other Revenues for Public Elementary and Secondary Education Expenditures in Connecticut Year Local Amount $ State Amount $ Federal Amount $ Other Amount $ Total Amount $ 1979-80 894,394,487 60.7% 466,930,376 31.7% 104,781,975 7.1% 7,492,224 0.5% 1,473,599,062 1989-90 1,825,545,264 50.2% 1,654,048,788 45.5% 145,829,040 4.0% 8,258,938 0.2% 3,633,682,030 1999-2000 3,241,550,799 52.5% 2,611,216,407 42.3% 304,496,854 4.9% 19,439,007 0.3% 6,176,703,067 2004-05 4,418,423,489 55.4% 3,047,353,586 38.2% 488,541,690 6.1% 27,722,328 0.3% 7,982,041,093 2005-06 4,652,873,221 52.9% 3,643,412,412 41.4% 478,742,751 5.4% 27,683,453 0.3% 8,802,711,837 2006-07 5,106,006,361 54.7% 3,713,838,930 39.8% 474,377,879 5.1% 34,951,365 0.4% 9,329,174,535 2007-08 5,027,237,839 52.3% 4,065,819,333 42.3% 483,130,093 5.0% 34,951,365 0.4% 9,615,349,631 2008-09 5,220,097,913 52.5% 4,173,559,868 42.0% 494,751,397 5.0% 45,954,968 0.5% 9,934,364,146 2009-10 5,237,788,750 52.9% 3,704,901,103 37.4% 921,354,437 9.3% 42,087,556 0.4% 9,906,131,846 10 10 of 21 CONFIDENTIAL FINLEY000026_001 0 Local, State and Federal Shares 1979-80 through 2009-10 70% 60% - 50% 40% 30% 20% 10% 0° • ,00 ,•Local't, 5tate% --Federal% 1090 1981 1992 1093 1981 1995 la $937 1228 1909 1010 1991 1332 1903 1994 1935 1916 1997 1990 1009 2000 2001 2002 2003 2104 2005 2006 2007 2000 2009 2010 60.7 59.1 59.0 57.6 56.6 54.6 55.8 55.2 57.1 51.3 50.2 54.5 54.5 56.6 56.0 56.0 55.9 57.2 55.8 54.2 52.5 53.7 53.5 54.3 55.8 . 155.4 52.8 54.7 52.3 525 52.1 425 44.2 45,5 40,0 40.6 38.3 33,1 39,3 39.0 05,9 39,3 40,9 42,3 41,0 40.7 39,5 38.4 30,2 41,4 35.0 42,3 41.0 37,4 31,7 33,3 34,5 36.5 37,7 40.2 39,2 40.2 7.1 7.0 6,0 55 5,3 4.9 4,7 4.4 4.2 4,2 4.0 4.4 44 4.9 4,6 4.4 4.2 4,0 4.5 44 4.9 4,9 5.4 54 5.7 6.1 5.4 5.1 5.0 54 94 11 of 21 CONFIDENTIAL FINLEY000026_0011 Education Cost Sharing Grant Fully-Funded (Target) Aid Foundation x Need (Weighted) Students x Aid Ratio (State Support Percentage) + Regional District Bonus 12 12 of 21 CONFIDENTIAL FINLEY000026_0012 Foundation (Per Weighted Student Spending Level) 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 through 1997-98 1998-99 1999-00 through 2006-07 2007-08 to Present $3,918* $4,192* $4,486* $41 800* $41 800* $41 800* $5,711 $5,775 $5,891 $9,687** * Prior to 1995-96 ECS excluded special education. ** Subject to a phase-in. 13 13 of 21 CONFIDENTIAL FIN LEY000026_0013 Town Student Need Count (a) Resident Students Kindergarten through Grade 12 Students ± One-half credit for OPEN Choice Participation ± Credit for Extended School Year ± Full-time Equivalent (FTE) Prekindergarten (Excluding School Readiness) + FTE Tuition-Free Summer School 14 14 of 21 CONFIDENTIAL FINLEY000026_0014 Town Student Need Count (b) Need Students Resident Students + 33% of Title I Poverty + 15% of Limited English Proficiency (LEP)* Students *LEP represents total English Language Learners minus students eligible for funding under the state Bilingual grant. Note: Resident students include in-district and out-of-district regular and special education students who are the fiscal responsibility of the district. It does not include students enrolled in the district at the expense of another district. 15 15 of 21 CONFIDENTIAL FIN LEY000026_0015 Aid Ratio (State's Percentage of Support of the Foundation) (a) Income Adjuster Per Capita Income (PCI) + Median Household Income (MHI) Highest PCI Highest MHI 2 (b) Adjusted Equalized Net Grand List (AENGL) 3-year Average Equalized Net Grand List (ENGL) x Income Adjuster (c) Town Wealth AENGL Population + AENGL Need Students 2 (d) State Guaranteed Wealth Level (SGWL) Median Town Wealth (Rank 85) x 1.75 (e) Aid Ratio 1 — (Town Wealth/SGWL) No town may receive an aid ratio of less than 9 percent. The highest aid ratio in 2011-12 is 91.67 percent 16 (Hartford). 16 of 21 CONFIDENTIAL FINLEY000026_0016 Regional Bonus for Each Member Town For students enrolled in the region, each member town receives a regional bonus as noted below: ■ Kindergarten through Grade 12 members receive $100 per student. ■ Grades 7 through 12 region members receive $46.15 per student. ■ Grades 9 through 12 region members receive $30.77 per student. 17 17 of 21 CONFIDENTIAL FINLEY000026_0017 Adjustments to the Fully-Funded Formula Over the years, there have been a number of statutory adjustments to the fully-funded formula. Over time, these have included: ■Grant Caps limit the amount of increase a town could receive from one year to the next. Towns impacted by grant caps receive less than the formula. ■Stoploss guarantees a prescribed level of funding regardless of the formula. Towns impacted by stoploss receive more than the formula. ■Phase-In is often employed when there are significant changes to the ECS formula. Phase-in allows the State to implement the formula changes in stages over time. 18 18 of 21 CONFIDENTIAL FIN LEY000026_0018 Recent History of Adjustments ■2006-07 — All districts were guaranteed a minimum grant of at least 60 percent of the fully-funded formula. ■2007-08 — A 17.1 percent phase-in was implemented, and all districts were guaranteed a minimum 4.4 percent increase over the prior year. ■2008-09 — A 15.7 percent phase-in was implemented, and all districts were guaranteed a minimum 4.4 percent increase over the prior year. ■2009-10 — The formula was replaced with the entitlements specified in statute, basically holding towns to their 2008-09 levels. 19 19 of 21 CONFIDENTIAL FIN LEY000026_0019 ECS Grant Percent of Target Aid plus Regional Bonus Funded 2005-06 through 2011-12 Fiscal Year (1) Target Aid plus Regional Bonus (2) Total Appropriation (4) (3) Percent of Formula Funded (Col 2 / Col 1) Funding Gap (Col 2 - Col 1) 2005-06 $1,576,175,824 $1,619,486,942 102.70% $43,311,118 2006-07 1,545,953,224 1,627,598,155 105.30% 81,644,931 2007-08 2,675,159,699 1,809,212,278 67.60% (865,947,421) 2008-09 2,630,075,409 1,889,128,288 71.80% (740,947,121) 2009-10 2,628,880,903 1,889,609,057 71.90% (739,271,846) 2010-11 2,620,743,377 1,889,609,057 72.10% (731,134,320) 2011-12 2,614,412,779 1,889,609,057 72.30% (724,803,722) 20 20 of 21 CONFIDENTIAL FINLEY000026_0020 ECS Formula Challenges ■Foundation Under original legislation the foundation was set at the expenditure per pupil of the town where the 80th percentile pupil resided (based on 3-year-old data). To date the foundation has been written into statute. ■Need Students Poverty weighting. Title I data as opposed to free and reduced lunch, aid to dependent children, or other alternative measures. ■Town Wealth (1) Per Capita Income and Median Household Income are from the decennial census and are only provided once every 10 years. Starting with the 2010 census, that information is not collected but will be generated through the American Community Survey. (2) State Guaranteed Wealth Level — under the original legislation it was to be set at 2. Currently it is at 1.75. (3) Guaranteed minimum aid ratios. Currently the minimum is at 9 percent. It has been as low as zero. ■Other issues: money follows the child, phase-in of the foundation and guaranteed minimum and maximum funding levels (hold harmless/stop loss, grant caps). 21 21 of 21 CONFIDENTIAL FINLEY000026_0021