VIII. Summary of State Aid Ratios

Background:

The Millbrook Central School District Board of Education asked the Citizens Facilities Committee to examine and become familiar with the construction aid ratios for school districts in the region and in the state. The committee prepared the following review of aid ratios to help explain the means by which New York State calculates aid ratios for all school districts in the state. The state calculates many aid ratios for different aspects of a school district’s expenses. These aid ratios include Comprehensive Operating Aid, Building & Building Reorganization Incentive Aid and many others. Each aid ratio is calculated differently, however, all aid ratios are based on a district’s wealth. This basic calculation of a district’s wealth is described in this report. It is important to note that the State’s determination of a school district’s aid ratios is non-negotiable. Also, the calculations may change from year to year as income and property values change and as the state government changes.

A comprehensive explanation of the different aid ratios and their calculations can be found on the New York State Education Department’s web site stateaid.nysed.gov and on the NYSED Office of Management Services web site in a report on Fiscal Analysis at www.oms.nysed.gov/faru.The information presented here also came from the following reports: “Examining Individual School Districts District Wealth”, “New York State Education Department, Research Monograph, School District Responses to Building Aid Incentives, April, 2002” and “Description of 2003-2004 New York State Executive Budget Recommendations for Elementary and Secondary Education, Education Unit, New York State Division of the Budget, January 29, 2003”.

General Aid Ratio Determinations

There are many different calculations for different aid ratios.This summary will focus on a couple of the common factors that go into aid ratio calculations and specifically on the calculation for construction or building aid.Many aid formulas are based on a school district’s Combined Wealth Ratio (CWR).There are two components of the Combined Wealth Ratio, the Pupil Wealth Ratio (PWR), which is a measure of the property wealth of the district, and the Alternate Pupil Wealth Ratio (APWR), which is a measure of the income wealth of the district.Both of these indices use the state average in their calculations.Thus, if the property or income wealth of the district is greater than the state average, the resulting index will be greater than 100%.The Construction or Building Aid Ratio is based solely on the property wealth of a district, and uses a different measure of the pupil count than the Pupil Wealth Ratio described here.

Pupil Wealth Ratio (PWR)

This is the property wealth component of the Combined Wealth Ratio used in state aid formulas.The economic theory is that the higher the PWR, the greater the property wealth behind each pupil, thus the greater the potential to generate funds locally.

Calculation:

PWR = (Actual Valuation of Taxable Real Property/Total Wealth Pupil Units)/State Average

Alternate Pupil Wealth Ratio (APWR)

This is the personal income component of the Combined Wealth Ratio used in state aid formulas.The theory is that the greater the income behind each pupil, the greater the ability to pay school taxes.

Calculation:

APWR = (Adjusted Gross Income/ Total Wealth Pupil Units)/State Average

BUILDING AID: WHAT, HOW, AND WHY (From “New York State Education Department, Research Monograph, School District Responses to Building Aid Incentives, April, 2002”)

Building Aid is available for approved public school expenses incurred in the construction of new school buildings, additions, and alterations or modernization of district-owned buildings.It may also be used for the purchase of existing structures for school purposes and even in very rare cases for lease- and installment-purchase payments.Approved expenses are those for financed projects and those paid outright from budgetary appropriations or capital reserves.

How Building Aid works

Districts submit capital construction plans and specifications to the State Education Department, whose staff calculate a maximum pupil capacity for the spaces planned and a maximum construction cost allowance.In the case of projects financed with bonds, the interest costs related to the cost allowance are also aided.The State share (the Building Aid Ratio) of the allowable expense for any given district is wealth equalized.It is calculated on a sliding scale based on the district's property value per pupil in relation to the State average.School districts are given a choice of either their current-year Aid Ratio or the most favorable Aid Ratio calculated for the district between 1981-82 and the present.Starting with all new building projects approved by voters beginning July 1, 2000, the selected building aid ratio is based upon the greater of a school district’s current-year building aid ratio or the aid ratio selected for use in 1999-2000 reduced by 10 percentage points.

Calculation:

Building Aid = Selected Aid Ratio x Building Expenses

Current Aid Ratio = [1-(2000 Actual Valuation of Taxable Real Property / 2001-02 Resident Weighted Average Daily Attendance x 0.51)] / State Average

Legislative provisions have created added incentives since 1998

In 1997, the Legislature enacted two far-reaching changes to Building Aid.First, the formula began to compensate for the relatively high construction costs faced by certain districts because of conditions in their local labor market.Specifically, the legislation introduced a regional cost adjustment designed to recognize higher construction costs in different areas of the State.The adjustment is based upon the county-level wages of electricians, plumbers, and carpenters indexed to comparable statewide figures.The resulting regional cost factor is applied to the construction cost allowance.In addition, legislation in that year also provided a ten-percentage point increase in the Building Aid Ratio (State share) for all school districts (capped at 95 percent).Both changes, which took effect in 1998, stimulated a surge of new construction activity.

An important—and continuing—factor about the Building Aid formula restructuring of 1997 was that it continued to offer districts a "choice" of two different Building Aid Ratios.(The word "choice" is in quotations because districts do not actually make this choice.The State

Education Department automatically selects the most advantageous Building Aid Ratio for each district.)Instead of the current-year Aid Ratio districts used whichever Aid Ratio dating back to 1981-82 proved most advantageous to the district.As a result, the correspondence between a district's "selected" Building Aid Ratio and its true fiscal capacity remained weak.Indeed, for projects approved between July 1, 1998 and July 1, 2000 fewer than ten percent of school districts (57 districts) used their current-year Building Aid Ratio.Moreover, in several cases the difference between a district's current-year Building Aid Ratio and its "selected" Building Aid Ratio was more than 40 percentage points.

The Laws of 2000 enacted further changes regarding the choice of Building Aid Ratios for projects approved by voters on or after July 1, 2000.Two options were identified: 1) the current-year Aid Ratio, or 2) the selected year Aid Ratio (from 1981-82 to 1999-2000) minus ten percentage points.An additional ten-percentage point incentive was then added to the selected option, effectively resulting in the assignment of either: 1) the current-year Aid Ratio plus a ten percentage point incentive, or 2) the selected Aid Ratio from the period 1981-82 to 1999-2000 (since in the latter case the subtraction of ten points offsets the ten-point incentive).These changes led to an increase in the number of districts using their current-year Aid Ratio in calculating Building Aid.Indeed, 292 of 680 districts are using their current-year Aid Ratio for capital construction projects approved since July 1, 2000.This is roughly five times the number of districts that were using the current Aid Ratio for projects approved in earlier years.

Some Definitions

Actual Valuation of Taxable Real Property is the total assessed valuation of property on the tax rolls within the district adjusted by the State equalization rate determined for such rolls.Data are obtained from the NYS Office of Real Property Services (ORPS), through the Office of the State Comptroller.

Adjusted Gross Income is what is reported on State income tax returns and includes the results of the statewide computerized income verification process.

Average Daily Attendance is the average number of pupils present on each regular school day in a given period, an average determined by dividing the total number of attendance days of all pupils by the number of days school was in session.

Adjusted Average Daily Attendance is the same as Average Daily Attendance except half-day kindergarten Average Daily Attendance is weighted at 0.50 and is an average for the school year.

Resident Weighted Average Daily Attendance is the number of resident pupils attending public schools in the district plus the number of resident pupils in the district attending a full-time BOCES education or vocational program.

Total Wealth Pupil Units is based on the Adjusted Average Daily Attendance of pupils resident in the district plus weightings for Pupils with Special Educational Needs, students with disabilities and secondary school pupils.

Pupil Wealth Ratio (PWR) and Alternate Pupil Wealth Ratio (APWR) for Millbrook and other area schools for the last 5 years.

96-97

97-98

98-99

99-00

2000-01

96-97

97-98

98-99

99-00

2000-01

PWR

PWR

PWR

PWR

PWR

APWR

APWR

APWR

APWR

APWR

MILLBROOK

237.9%

250.2%

241.4%

235.6%

196.4%

133.6%

140.0%

131.8%

162.4%

137.8%

RHINEBECK

188.7%

189.1%

195.3%

189.6%

184.8%

135.6%

135.4%

144.7%

146.8%

150.2%

PAWLING

170.3%

157.9%

158.4%

155.9%

153.5%

118.7%

109.7%

117.1%

111.3%

112.8%

RED HOOK

97.1%

97.2%

94.6%

93.9%

94.7%

72.1%

71.9%

72.9%

71.5%

73.5%

PINE PLAINS

143.8%

144.8%

141.4%

142.7%

144.8%

73.7%

74.0%

78.7%

77.4%

77.8%

BEACON

89.5%

86.5%

85.5%

83.3%

80.7%

97.4%

93.8%

90.6%

84.4%

84.1%

DOVER

88.9%

90.7%

87.8%

85.4%

81.9%

69.3%

70.5%

70.6%

64.8%

64.2%

HYDE PARK

100.8%

100.1%

99.8%

94.3%

93.1%

90.7%

89.8%

92.3%

86.7%

84.2%

NORTHEAST

136.5%

141.7%

137.6%

139.5%

146.9%

67.0%

69.4%

67.2%

63.8%

85.5%

	96-97	97-98	98-99	99-00	2000-01	96-97	97-98	98-99	99-00	2000-01
	PWR	PWR	PWR	PWR	PWR	APWR	APWR	APWR	APWR	APWR
MILLBROOK	237.9%	250.2%	241.4%	235.6%	196.4%	133.6%	140.0%	131.8%	162.4%	137.8%
RHINEBECK	188.7%	189.1%	195.3%	189.6%	184.8%	135.6%	135.4%	144.7%	146.8%	150.2%
PAWLING	170.3%	157.9%	158.4%	155.9%	153.5%	118.7%	109.7%	117.1%	111.3%	112.8%
RED HOOK	97.1%	97.2%	94.6%	93.9%	94.7%	72.1%	71.9%	72.9%	71.5%	73.5%
PINE PLAINS	143.8%	144.8%	141.4%	142.7%	144.8%	73.7%	74.0%	78.7%	77.4%	77.8%
BEACON	89.5%	86.5%	85.5%	83.3%	80.7%	97.4%	93.8%	90.6%	84.4%	84.1%
DOVER	88.9%	90.7%	87.8%	85.4%	81.9%	69.3%	70.5%	70.6%	64.8%	64.2%
HYDE PARK	100.8%	100.1%	99.8%	94.3%	93.1%	90.7%	89.8%	92.3%	86.7%	84.2%
NORTHEAST	136.5%	141.7%	137.6%	139.5%	146.9%	67.0%	69.4%	67.2%	63.8%	85.5%