School Finance Synopsis
D. School Finance Formula Overview
Formulation of the MAP model components might best be explained by dividing the formula into two major functional areas:
· The determination of dollars per ADM based upon the three prototypical school types; and
· Subsequent adjustments to the dollars per ADM.
The prototype calculates the total cost of delivering the educational basket in the model school, and provides an average cost per student (ADM) based upon formula components. An adjustment to this average per student (ADM) cost is made to customize funding to each school district based upon its student characteristics, specific services and unique school, district and regional properties. For example, a cost based upon a statewide average amount per ADM is first computed for a given model component. This statewide average amount is then modified based upon the actual cost experience of the district. The result to the district can either be an addition to or a reduction from the statewide average.
1. Basic Formula - Dollars per ADM.
For each school district, the formula establishes an average dollar amount per ADM based upon the per ADM dollar amount specified by law for each of the three school types (elementary, middle and high school). These statutory dollar amounts are based upon the prototypical school models and do NOT change unless amended by the Legislature. Current statutory dollar amounts are as follows:
Elementary School $6187/ADM
Middle School $6174/ADM
High School $6405/ADM
The only modifications to a school district's average per ADM dollar amount used in the formula are the result of annual differences in the proportion of students enrolled in various grade levels. For example, if the proportion of high school students increases in a district in a given year, the average dollar amount per ADM in the district increases for that year. The dollars per ADM at the high school level are by law greater than at other school levels.
2. Adjustments to Basic Formula.
Once the average dollar amount per ADM is established for each school district, a series of adjustments occur. These adjustments can best be described by grouping them into three different categories, based upon the purpose of the adjustment.
(a) Adjustments Reflecting Actual Expenditures.
Several adjustments under current law are made to the basic formula by removing the amount built into the basic formula dollars per ADM for a specific component, and substituting actual district expenditures for that amount.
· Operations and Maintenance. For each school district, the statewide average cost of transporting students included within the model is replaced by 100% of actual district transportation operations and maintenance expenditures for the preceding school year, subject to certain limitations. School bus operations and maintenance expenditures are subject to standards promulgated by the State Department and include expenditures for all student transportation, both home-to-school and student activities, but exclude capital outlay for school bus purchases or leases. Actual prior year expenditures in excess of 100% of the same proportion that district transportation expenditures bore to total district general operating expenditures for the immediately preceding year are subject to State Department review. Student activities eligible for inclusion in the transportation operations and maintenance expense reimbursement are subject to certain statutory limitations and rule and regulation of the State Department, and include activities sanctioned by the Wyoming High School Activities Association as well as those school sponsored activities in grades preceding high school which directly correspond to the sanctioned high school activities.
· School Bus Purchases/Leases. The transportation adjustment also includes reimbursement for district capital outlay expenditures for buses and other vehicles used primarily for student transportation. The adjustment applies to school bus purchase/lease expenditures occurring after March 1, 1998, and consists of 100% of actual district lease payments made during the prior school year and 20% of total bus purchases made by the district during the preceding five school years, which results in 100% reimbursement of total purchases over time. District purchase and lease agreements are subject to minimum state standards for vehicle specifications and equipment, vehicle replacement and vehicle fleet size. District vehicle fleets were effectively frozen in size as of February 10, 1999, with subsequent fleet modifications subject to State Department criteria. Prior to finalization of this permanent adjustment for school bus capital outlay, a transitional adjustment was made based upon school bus purchase/lease expenditures made on or before March 1, 1998. Under this transitional adjustment, districts are reimbursed commencing school year 1998-1999 and continuing through school year 2001-2002, for 1/6 of all expenditures made during the 1997-1998 school year and the previous three school years.
(ii) Special Education. The statewide average cost for special education programs is removed from the base formula and for each district, is replaced by 100% of the actual allowable district special education expenditures for the preceding school year subject to limitations. Allowable special education expenditures include district programs and services for students with disabilities as identified under federal law. A limitation on reimbursement is imposed upon special education programs which is similar to the limitation imposed upon the transportation operations and maintenance adjustment. Special education program expenditures in excess of 100% of the proportion that district special education expenditures was to total general operating expenditures for the preceding year are subject to State Department review and district justification. The 1999 Legislature by law imposed a requirement upon the State Superintendent to collect three years of data on the adjustment, to review the data and to report recommendations for modifications to the adjustment to the Joint Education Interim Committee, who then is required to report to the 2003 Legislature.
Both the transportation adjustment and the special education adjustment include incentives for expenditure reductions by allowing districts to share equally in program cost savings over prior school years. Additionally, the Legislature has provided incentives for expenditure reductions in transportation and special education programs through cooperative service arrangements among districts.
(iii) Teacher Extra Compensation. The model recognizes situations in which districts are required to provide extra compensation to teachers for performing regular duties involved with delivering the basket to district students. Extra compensation is frequently required when districts employ teachers in remote locations and accordingly provide housing or a housing allowance. The adjustment reimburses a district in full for documented costs of extra compensation.
(b) Adjustments For Additional Funds Based Upon Student Population.
Adjustments under this category are computed pursuant to a statutorily prescribed formula for providing additional amounts to each district to compensate for student populations. The amounts vary depending upon the extent to which specified differences in student populations occur.
(i) Small Schools.
· Necessary small schools. Necessary small schools, as earlier described within this report, are provided a separate adjustment based upon model prototypes separate from the basic formula model prototypes. The necessary small school prototypical configuration is comprised of an elementary school model consisting of kindergarten through grade eight, with a class size of ten students, and a high school model comprised of grades nine through twelve and a class size of sixteen students. Model cost components are determined using the same methodology as used within the regular model prototypes, and the small school prototypes include several additional components not included within the basic formula prototypes. Reflected in components of the small school model are the actual costs of student activities and utilities over and above amounts contained within the prototypical models for these costs, and the difference between the actual costs of the provision of student lunches and revenues generated from school lunch fees. Essentially, the small school prototypes provide a lower student-teacher ratio, with support costs spread among fewer students. A total cost adjustment is computed for each district based upon the exact number of students (average ADM) in each small school within the district. To avoid counting small school ADM twice within any district's per student prototypical funding, the formula subtracts from the small school prototypical funding amount, district funding computed under the basic formula prototypical models based upon small school ADM.
· Unusually small schools. Because of the unique circumstances and costs associated with the operation of very small schools, an adjustment for unusually small schools is made as a component of the necessary small school adjustment. For the very small school, many marginal costs are not linear in nature and tend to occur in substantial increments. The cost of adding an additional teacher for example, becomes extraordinary on a per student basis. For those schools qualifying as unusually small schools, districts receive a funding adjustment based upon a modification to the necessary small school prototypical model. Under this adjustment, the unusually small school funding is based upon a series of fixed block amounts predicated upon ADM groupings. Beyond the first ADM grouping, which primarily replicates the one-teacher elementary school and two-teacher high school, the block grant amounts are "smoothed out" to reflect increases on a per ADM basis as opposed to a stair-stepped, blocked augmentation. To this is added the actual costs of adding an additional teacher, if in fact a district does so. In general, as the size of the unusually small school increases, the costs per student are proportionately decreased.
(ii) Small District Adjustment. As previously reported, an additional adjustment is made for those “small” districts with 1350 ADM or less. This adjustment to the prototypical funding amount provides additional funding for district administration, maintenance and operations expenditure categories incorporated within the model formula to reflect costs incurred by districts in serving the schools within its boundaries. Additionally, each small district receives an additional amount ($50,000) for each attendance center operated within the district which is in addition to the one in which the district office is located (schools operated in more than one community including one-teacher schools). The adjustment for administration is made for those districts with fewer than 900 ADM, and the adjustment for maintenance and operations is made for those districts with fewer than 1100 ADM.
(iii) Economically Disadvantaged Youth. An adjustment is made for economically disadvantaged youth (EDY) based upon the percentage of children within each school in the district that are eligible for the federal free and reduced lunch program. A district receives an EDY adjustment if the percentage of eligible children within any of its schools exceeds 150% of the statewide average concentration level for each school type. $500 is then multiplied by the number of EDY children within each qualifying school within the district. The resulting amount is added to the prototypical funding amount per ADM for the district.
(iv) Limited English Speaking. Similar in concept to the EDY adjustment, the adjustment for students with limited English proficiency (LES) is based upon individual school concentration levels of students identified under state identification and assessment procedures as limited English proficient. For those schools in which 5% or more of the total ADM are so identified, the LES adjustment is computed and applied by multiplying 15% of the dollar per ADM amount for the appropriate school level prototypical model, times the number of identified LES children within each eligible school within the district. This amount is then added to the basic dollar per ADM amount computed for each district.
(c) Adjustments for Internal Equity.
Several adjustments are included within the model to address costs over which districts have little control. These adjustments are made by separate formula under which a district may receive more or less funds depending upon the circumstances of the district.
(i) Teacher Seniority. Seniority among the teaching staff is an important cost consider-action addressed through an adjustment modifying the prototypical model amount upward or downward, depending upon the actual seniority level of district personnel compared to the statewide cost for seniority. The adjustment recognizes the fact that teacher seniority tends to be more a function of demographic and economic trends rather than district policy or choice. Adjustment computations are accordingly based upon the actual number of years of service for each district’s teaching staff and consistent with methodology establishing model component costs, a cost-value factor is established for one year of seniority based upon school year 1996-1997 data. District seniority levels are computed each year as an average of the three preceding school years.
(ii) Regional Cost-of-Living. In order to provide districts an equal opportunity to employ personnel of comparable quality, an adjustment is made to the prototypical per ADM amount for the higher cost of living in some areas of the state. The adjustment is made after completion of all other adjustments except for the external cost adjustment and is based upon a modified version of the Wyoming Cost-of-Living Index referenced as the revised-net-WCLI-2. The revised-net-WCLI-2 is defined and discussed earlier within this report. Using Albany and Laramie counties as the base point, all remaining counties are readjusted according to their relationship to Albany and Laramie counties. Use of Albany and Laramie counties as the base point stems from the existence of a relatively broad labor pool not available elsewhere within the state.
(d) External Cost Adjustment.
The model is based upon information regarding educational adequacy and expenditure, price and cost data available during model development. In an attempt to maintain the integrity of the model, the MAP report recommends a re-evaluation of the entire model. This re-evaluation or adjustment is much broader than adjustments to individual prototypical components or adjustments for differences among districts. Rather, the adjustment would apply to the entire model following completion of all other adjustments and would systematically review the resources included within the model based upon "external" factors affecting the model. It entails a system-wide adjustment based upon factors reflecting changes in costs over time. The Joint Appropriations Interim Committee is required to develop recommendations for submission to the Legislature regarding the need for an external adjustment and if required, the amount of the adjustment. An adjustment was recommended to and adopted by the Legislature for school year 2001-2002.
NOTE: All direct reimbursement adjustments made under the model at 100% of actual costs are made at the computed actual reimbursement level without further adjustment for regional cost-of-living or external system-wide influences. Direct reimbursements include transportation operations and maintenance costs, special education costs, teacher extra compensation costs and other costs reimbursed at actual cost levels.
(e) Hold Harmless Adjustment.
Redistribution of state financial assistance to schools under the cost-based system of school finance resulted in different impacts upon districts. In order to ease the burden of the transition from the classroom-unit based foundation program to the cost-based program, and to avoid significant district revenue decreases, a limit was imposed upon the amount of money a district could lose in any one year. The limit applied only to school years 1998-1999 and 1999-2000 and was commonly referred to as the "hold harmless adjustment." Essentially, districts were guaranteed to receive not less than 98% of their adjusted general fund revenues per ADM for the prior school year.