School funding explained, Part 2

This is the second post in a continuing series on school funding written by Greg Lynam of the Finance Committee. The first post can be found here

Foundation Budget, MRG & Case Study:
As we have already discussed, the DOE fabricates an educational budget for ALL the public school children of Dartmouth. This ‘Foundation Budget’, as it is called, is divided on a per student basis among the public school systems that Dartmouth participates in, namely the “Greater New Bedford Regional Vocational Technical High School” , “Bristol County Agricultural High School”, and our own “Dartmouth Public School system”.

The ‘Foundation Budget’ is built up for each school system on a “Per Student” basis. In other words, ‘a’ particular student in ‘a’ particular grade with ‘a’ specific attribute is budgeted ‘a’ particular amount of money for each of 11 cost categories such as Administration, Instruction, Guidance, etc. These monetary amounts are for budgeting purposes ONLY. There is NO obligation on the part of ‘a particular school system to spend that particular amount of money on that particular student .. except.... that at least ½ of the amount attributed to maintenance MUST be spent per student.

ALL public school systems in the commonwealth receive EXACTLY the same dollar amount for the same category ‘kid’ regardless of if it’s Boston or Westport, Freetown or Dartmouth – each and every ‘Middle school kid’, for example, will be budgeted ( for FY 07 ) $ 5,706 ... EVERY High School kid will be budgeted $ 7,115 and every elementary kid will be assigned $ 6,019. A special need child in district is apportioned $20,822 ... out of district the amount rises to $ 21,750.

There are 14 such categories in all to include Kindergarten, Special Ed in and out of district, ELL [ English Language Learner ] , etc. As you can see, differing numbers of kids in particular grade levels in ‘a’ particular community will produce foundation budgets of differing amounts for differing communities. Special needs can cause wide gyrations.

I just said that EVERYBODY receives the same amount ... well, there is ALWAYS an ‘if’, ‘and’ or a ‘but’ ... Here it is :

On top of this is applied a “Wage Adjustment Factor” that attempts to compensate for the varying costs of labor in specific markets. Where the prevailing wage is significantly above the State average, the above amounts are adjusted upward among those 11 cost categories that are mostly labor . Dartmouth is at 100% ... no adjustment factor. Brockton, for example, is adjusted DOWNWARD to 93.3% of these allocations while Plymouth is adjusted UPWARDS to 102.9%. This might not sound like much, but that extra 2.9% of Plymouths $71 mil foundation budget is about $2 mil... more. [ about $237 / pupil ] The DOE estimates that the cumulative effect of these differences will cause a gyration in excess of $1,000 per student in Per Pupil Expenditures [ PPX ] from one community to the next.


Question: If everyone gets the same amount of money, why do some communities exceed our own PPX by a lot more than the expected $1,000 PP variance ?

That answer lies in the way the “ Required Local Contribution “ to education spending is derived. In determining the actual amount that MUST be spent [ Required Net School Spending ] there are two forces at work ... independent of each other.

It all started with a model school budget fabricated back in, “ .. the early 1990’s “ from a lot of assumptions by a lot of ‘experts’ in an effort to quantify, “... what constitutes an adequate-but not excessive-level of funding. “

Since 1994 this initial $ 19,111,921 budget has just been incremented each year, without regard to actual needs or expenditures, by an inflation factor limited, until recently, to 4.5 % per year. This is the Foundation Budget, we just went over above and in previous writings.

The fact of the matter is that foundation budgets have risen since 2000 by : 1.7% ~ 3.4% ~ 8.6% ~ 7.9% ~ 4.0% ~ 3.0% ~ 4.9% and in 2007 it increased by 5.9%

The second force is the “Required Local Contribution”, which is a calculation based not upon the Foundation budget, but based upon what ‘we’ were required to contribute the year before : [ ( THE PREVIOUS YEAR) x ( 100% + Municipal Revenue Growth Factor ) = Required Local Contribution ].

The Municipal Revenue Growth factor is simply the ratio of revenue growth from FY06 to FY07 .. it is as simple as that. Add the levy limit for FY06 + the General Revenue sharing monies + budgeted recurring local receipts [ $ 41,521,518 ] ... subtract this number from the same ( Est ) computations for FY07 [ accounting for new growth and prop 2.5 ] [ $ 44,146,974 ] = $2,625,456 .... now divide by the first number and voila ! ... “ Municipal Growth Rate “ factor [ MGR ] ... so simple, even a cave man can do it 

(( 41,521,518 – 44,146,974)/41,521,518) = .0632 ... or 6.32%

In the case of Dartmouth, this multiplier is 6.32% for FY 07.
This calculation has no bearing whatsoever on the actual foundation budget or the actual educational spending of Dartmouth or it’s actual needs.

Over the years it has ended up being an arbitrary amount predicated mainly on the assumed ability of the community to PAY. The greater the MRG ... the greater the increase in the “Required Local Contribution”, completely independent of the actual amount required to fund the school systems.

As you might imagine, a fast growing community in terms of overall property values and, by implication, tax collections will earn a high MRG and thus be required to pay an increasingly substantial amount as their “Required Local Contribution”. So much so that it is conceivable that it could, in fact, surpass the amount of the Foundation Budget itself!
This is exactly what happens in some communities, so the State has decided to limit this phenomenon to 150% of the Foundation Budget .

By the way ... “Required Net School Spending “ is the sum of all Chapter 70 monies + the “Required Local Contribution” + any monies the were required to be spent the year before, but were not. In the case of Dartmouth, however, the Foundation Budget is Required Net School Spending. ... at this time.

There is more coming on this subject. I have also been looking at the requirements for library spending. Stay tuned!