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Median Income
Option
Introduction 

 

Rationale for
Establishing
the Median 
Income Option
  

 

Methodology and
Formula for 
Computing
the Median 
Income Option

 

Analysis of Widely
Held Assumptions
about Nonresident
Taxpayers

 

Town-by-Town
Spreadsheet


 

Perspectives
Index

About 
Perspectives

Perspectives
on Education 
Issues

When School 
Expenses Rise, 
by Allen Larson

Perspectives 
on Housing 
Issues


 

 

RATIONALE FOR ESTABLISHING THE 
MEDIAN INCOME OPTION

 

The Median Income Option Formula Proposal

Under this proposal, the towns would receive the higher number of the two formulas:

  1. Property taxbased formula:  The current and, most likely, future formula
  2. Median incomebased formula:  The new formula

 

The Rationale for Creating Two Formulas

  • The failure of the current formula has been acknowledged:   The Governor, the Department of Education, and the Legislature have acknowledged the failure of state’s property valuebased formula to accurately and fairly gauge a community’s wealth or ability to pay by introducing alternative formulas attempting to mitigate the formula’s inequity to a broad number of communities.

  • Most alternatives proposed include, in essence, a two-formula approach:   Almost since the formula’s inception, the three branches have appointed a number of ad hoc committees to study Chapter 70 funding, including two in FY04. Most have kept the foundation budget formula intact and proposed new wealth measurements.

 

Five Previously Proposed or Implemented Alternative Formulas

1.  Pothole money:  This plan was introduced by the Legislature.

  • This formula was used in the late 1990s and 2003; it was temporary.
  • The extra funding increased the formula's final numbers for those communities historically shortchanged by the formula.

 

2.  Median income component:   This proposal was introduced by the Department of Education.

  • This formula has been used since 1994, but it was reconfigured in FY02 to its present and permanent structure.
  • Its purpose was to mitigate EQV rates at behest of communities historically shortchanged.
  • However, to most communities, its effects have been minimal.  Instead of using property values as a 100 percent measurement of wealth and/or ability to pay, it has reduced to about 90 to 95 percent the measurement of wealthfar from an even 50-50 measurement of the two main wealth indicators:  income and property.

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