Longitudinal Data - Equalization Aid

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Explaining General Aid (including Equalization Aid) Changes

Changes in a district’s demographics (membership, property value per pupil, shared cost, and other factors) can cause greater-than-normal “shifts” in a district’s Equalization Aid from year to year. Use this longitudinal Excel spreadsheet to review key factors in your district’s Equalization Aid computation and determine the reasons behind aid changes. Also provided are Excel graphs of select data elements. When assessing the reasons for aid shifting, two easily-identified statistics can quickly indicate what might be happening to the district within the funding formula:

"District Shared Cost Per Member as % of Secondary Ceiling" Observing how a district's shared cost per member, as a percent of the secondary ceiling, is changing over time can reveal how the district's spending level is changing in comparison to the rest of the districts in the state. For example, if the district in question was spending at 105% of the secondary ceiling a few years ago and is now spending at 100% of the secondary ceiling, this shows that, on average, the increase in expenditures for this district is not keeping pace with the increase happening in the other districts. This may or may not be causing less aid for this district; however, the general rule is that less cost usually means less aid or less of an increase in aid. (For negative tertiary districts, less cost usually means more aid.)

"District Equalized Value Per Member as % of State Average" Observing how a district's property value per member, as a percent of the state average property value per member, is changing over time can indicate whether the formula is viewing the district as more/less rich. For example, if the district in question had 104.5% of the state average property value per member a few years ago and now has 100% of the state average property value per member, the formula views this district as becoming less wealthy. Generally, as property value per member decreases, aid from the state increases.

The following Excel file contains longitudinal data to assist in identifying possible reasons for significant Equalization Aid eligibility changes from year to year. Each district has its own unique set of circumstances, and there can be many reasons why a specific district's aid fluctuates. The two statistics discussed thus far may not completely explain the aid shift in every situation, but they are strong indicators of what is happening to the district. Also included on page 2 of the Excel printout are graphs of select data elements.

Longitudinal Analysis of General and Equalization Aid Formula Components

Note: This spreadsheet contains district aid amounts PRIOR TO the Choice/Charter Deductions, whereas the worksheet link above incorporates those deductions. When analyzing why districts are shifting in the formula, certain details are more informative than others, and we have intentionally included those details in this longitudinal spreadsheet. If districts are looking for the July 1 Estimate of their 2009-10 Revenue Limit Line 12, see the above link. These 2 worksheets will not have the same bottom line, as they represent different things.

Please contact a Finance Consultant if you need assistance interpreting this data.

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Understanding and Explaining Equalization Aid

Want to understand the Equalization Aid formula? Ever have the need to explain it to someone new to Wisconsin public school finance?

Wisconsin’s Equalization Aid formula distributes financial assistance to school districts to achieve two basic policy goals: (1) reduce the reliance upon the local property tax as the sole source of revenue for educational programs; and (2) guarantee that a basic educational opportunity is available to all pupils regardless of the local fiscal capacity of the district in which they reside.

For these reasons, Equalization Aid is intended to make up the differences between a district’s actual tax base and the state guaranteed tax base. Simply stated, there is an inverse relationship between equalization aid and property valuations; those districts with low, per-pupil property valuations receive a larger share of their costs reimbursed through the equalization formula than districts with high, per-pupil property valuations. When a district’s per-pupil property value exceeds the state guarantee, “negative aid” is generated.

The Equalization Aid formula can best be understood by simplifying the computation to basic percentages. Although this is not the method prescribed in statute, it very closely approximates actual computations and is very useful for pedagogical or projection purposes. (In some cases, the totals differ only by a few dollars.)

The following two links both present the formula in "percentage" terms. The first link presents the computation in an algebraic format (all numbers), and the second link presents the computation with bar graphs.

October 15, 2009 Equalization Aid Computation – Percentage Method - Algebraic Format

October 15, 2009 Equalization Aid Computation – Percentage Method - Bar Graphs

For a detailed description of the Equalization Aid formula, please consult pages 7-12 in State Aid to School Districts , written by the Legislative Fiscal Bureau.

Please call finance consultant if you have further questions.

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2009-2010 Equalization Aid Formula Position

The following Excel graphs were developed to provide a quick visual snapshot of a district's general position in the Equalization Aid formula. Two (2) district variables, shared cost per member and value per member, are plotted in the graphs below. Further, the State guaranteed value per member and cost ceiling amounts are superimposed onto the district data. By observing the position of district variables in relation to the state variables, users can determine the general level of state support provided to the district by the Equalization Aid formula. (positive aid, negative aid, etc.) Note that plots are based on the type of school district - K-12, K-8, and UHS (Union High School).

We are aware that information displaying on the plots below can shift to look inaccurate depending on (it seems) the user's specific browser and the version of Excel that was used to create the file. If neither file displays accurately WHEN PRINTED (it may not look correct on the screen before printing), please contact a finance consultant for assistance.

The following set of Excel files was created in Excel 2007, but saved as a 2003 version.

Aid Formula Position K-8

Aid Formula Position UHS

Aid Formula Position K-12

This set was created in Excel 2003 and saved as a 2003 version.

Aid Formula Position K-8

Aid Formula Position UHS

Aid Formula Position K-12

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For questions about this information, contact dpifin@dpi.wi.gov (608) 267-9114

Last updated on 11/18/2009 4:16:49 PM