The 2006 education aid reform was designed to allocate aid based on a better model of community ability to pay. It was intended that the new model would be phased in over 5 years. Since 2009 (Fiscal 2010), as a response to the financial crunch, we have made formula modifications that have tended to preserve the old model aid distribution rather than making the full transition to the new in distributing available aid. The result has been that communities that fared poorly in the old model — that is, those communities that had high 2006 Required Local Contributions (“RLCs”) relative to their new model targets and their new model wealth peer communities — have continued to fare poorly.
Using the formula vocabulary from the previous page, there are four approaches to tuning our implementation of the aid formula to raise aid for those communities that have fared poorly. All of these approaches can be explored using the spreadsheet model available here.
- Increase the effort reduction percentage. This would indeed reduce the required local contribution for communities that have high RLCs. We are trying to help the communities that still have the highest RLC’s relative to their targets whatever that target may be. To reach these communities, the effort reduction would need to be substantial (e.g., 50%). Otherwise, the reduction will not bring their RLC far enough below their foundation budget to cause their foundation aid (foundation budget less RLC) to exceed their existing aid and actually result in an aid increase. However, a high effort reduction would also benefit many other communities in lesser need (disproportionately increasing aid for some) and so would be a very expensive way to remedy the problem.
- Reinstate down payment aid. This is very defensible as a strategy, and, if implemented at a reasonable level (30% to 50%) would benefit many communities. However, it proportionally benefits all over-target-RLC communities, including both those that have been well treated by the formula for the past few years and those communities that have not. An even narrower targeting may make sense in a fiscally constrained environment.
- Lower the ceiling on RLC from 100% to, for example, 85% — so putting a floor on aid at 15% of foundation budget. This does target communities who are in need of aid increases, but only benefits those at the high end of the wealth spectrum.
- Put a cap on the excess of RLC over target. For communities with an 82.5% target, a 2.5 percentage excess cap would be equivalent to the 85% limit on RLC, but it would also benefit communities who have high RLCs relative to lower targets. This is a fair approach and targets the communities most in need. It can be combined with a traditional effort reduction factor to spread aid further among above-target communities. This fourth approach appears to make the most sense. According to the spreadsheet model available here, a modest excess cap of 5.5 points with a 5.5% effort reduction would a cost neutral alternative to the H2 aid distribution.