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The ABCs of ECS

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In this post, we’ll summarize the role of the Education Cost Sharing (ECS) formula, the way it works, and how it’s dolled out. You can click on the different variables of the formula to find out exactly where those numbers come from as well. But we warn you, this post is not for the faint of heart!

Since we divide our State up into school districts, the State and the towns each bear some of the costs of each district’s public school system. In Connecticut, public schools are primarily funded through municipal property taxes, and the State makes a supplementary contribution to each public school system. However, the State can’t simply make the same grant to every district because some towns can more easily finance education than others. In fact, in 1977, the Connecticut Supreme Court determined that a system that allows “property wealthy” towns to spend more on education with less effort is a system that impedes children’s constitutional rights to an equal education.

That’s why Connecticut established a formula for distributing state education dollars, which uses property wealth as part of the determination. The Education Cost Sharing (ECS) formula was established in 1988 and has been revised numerous times. Theoretically, the State grant would make up the difference between what a community can afford to pay and what a district’s public school system actually costs.

Connecticut uses three variables to determine how much a community must raise from its property taxes to cover education, and how much the State must contribute to offset these costs:

  • The average estimated cost of educating a child (“Foundation”);
  • A calculation that considers the number of students within a town, including groups of students that are typically more costly to educate because they have greater needs (“Need Students”); and
  • Each community’s ability to financially support education (“Base Aid Ratio”)

In order to find each town’s entitlement to the state education grant, we multiply these variables together. We’re essentially multiplying the (cost per student) by the (number of students, adjusted slightly to account for needier groups)– which yields the total amount that it should cost to educate the children within the town. Then, we multiply that overall cost by the percentage that a town has the capacity to cover (Base Aid Ratio). All together, the formula looks like this:

 

Foundation x Need Students x Base Aid Ratio
= Town’s Entitlement to the ECS Grant

(Click on “Foundation,” “Need Students,” and “Base Aid Ratio”
to find out how these variables are calculated.)

Those are the ABC’s. Subject to some other weird exceptions and complications, that’s how the formula works. It basically gives your town a greater piece of the pie if it has:

  • A larger percentage of students living in poverty (which is the proxy for additional academic needs for students); or
  • Less income and property wealth (where property wealth has a more significant impact).

The Weird Exceptions and Complications

  1. There is a Minimum Aid Ratio. This means that every community, regardless of its wealth, gets some percentage of state education dollars. (The Minimum Aid Ratio is currently set at 10% for Alliance Districts and 2% for all other communities.) Unfortunately, dolling out the state’s education dollars is a political process. Perhaps that’s why Connecticut has a long history of funding wealthy communities that might not necessarily need support to cover the costs of educating their students. In fact, ECS decreases have been capped so that–even if the formula indicates a town should get nothing–that town still always gets a piece of the pie.

  2. The State can’t actually cover the costs of all of its entitlements. (Fully funding the 2013 formula would cost Connecticut more than $700 million!) Therefore, even though each town is entitled to X dollars, based upon the ECS formula — the dollars need to be phased in over time, rather than paid up front each year. The phase-in rules often change within different iterations of the formula, which makes it difficult for districts to budget each year; they don’t know how much money they’re actually going to get.

  3. The ECS formula holds towns harmless. When we plugged in the data for towns’ wealth to the 2013 formula, it turned out that the grant amount for many wealthy towns would have decreased from the previous year. However, the 2013 formula was careful to hold these communities harmless, meaning that they would get the greater of their prior year’s grant amount or the phase-in of the new ECS amount. (In fact, the proposed budget from the Appropriations Committee operates under a similar theory by holding towns harmless from the formulaic changes. Under the 2013 formula, there were many towns that anticipated increases in their grant amounts for the 2015 fiscal year; however, when their updated income data was plugged in, it turned out that they would actually receive lower grants than they’d expected. The Appropriations budget therefore holds these towns harmless so that they don’t get a reduction in their increases.)

  4. The 2013 formula specifies a faster phase-in for the Alliance Districts. There are 30 Alliance Districts, and the 10 of these that are the lowest performing are called Education Reform Districts. Under the 2013 iteration of the ECS formula, these thirty districts get a faster phase-in of the difference between their previous entitlements and their updated entitlements under the new formula. Funding is phased in as follows: Phase-in

  5. Connecticut is actually off the formula. As confusing as the ECS formula is, what’s even more confusing is that the State keeps deviating from the formula when it doesn’t work out as expected. For example, this year, when the State plugged in all the updated enrollment and wealth data, it turned out that two thirds of the Alliance Districts would have lost some of the ECS funding they were expecting. Accordingly, both the Governor and the Appropriations Committee proposed budgets that disregard the formula, instead simply awarding state education dollars on a town-by-town basis.

What do you think? Does the state’s system of financing public education needs to be re-thought?

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