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
TownbyTown
Spreadsheet
Perspectives
Index
About
Perspectives
Perspectives
on Education
Issues
When School
Expenses Rise,
by Allen Larson
Perspectives
on Housing
Issues

3. FY02 stalemate: Towns received the
higher of two options, which was a compromise plan of the three branches:
 This formula was used in FY02; it was temporary.
 The state failed to statutorily renew
the formula after 7 years.
 The House proposed a new formula, but no agreement
was reached with Governor or Senate.
 Compromise: The districts took the
higher Chapter 70 number of the Governor or the House; or if the Senate
was higher than both, the average of the House and Senate figures.
4. FY03 target share: Towns were to receive a
percentage of the foundation budget, an adjustment to the formula introduced by former Governor Jane Swift:
 This formula was never used.
 The bill failed in the Legislature and
was dropped
by Governor Romney.
 The idea was to keep the original formula
intact with the introduction of a target share percentage,
which was in essence a second,
parallel formula, to be reached over an indeterminate number of years.
 The target share was to be a new component
in the existing formula, to be a factor that could be considered
without changing the entire formula.
 This plan would maintain the formula based on property
values, but it would use an adjusted EQV per pupil to measure a community's
wealth and determine its target share. A community below the state
AEQV per pupil average would see an increase in Chapter 70 funding; a community above the
state AEQV would see a decrease in it.
 The target share would kick in only when the
economy improved.
5.
FY04 circuit breaker: This proposal would be a simplification of the current
formula; it was introduced by
Governor Romney:

This formula
was never used.

The bill failed in
the Legislature.

The proposed changes to
the formula were to be permanent.

It relies even
more heavily on property values than have past formulas.

Because of this heavy reliance, includes a “circuit
breaker,” which decrees that no town shall pay more than 88 percent of its
foundation budget and, conversely, receive no less than 12 percent of its
foundation budget in state aid.

The circuit breaker is
a response to towns like
Barnstable, which, according to Governor Romney's formula, can afford to pay $49 million for its
schools yet has a foundation budget of $48 million. Therefore, according
to his formula,
Barnstable
can afford to foot the entire bill for its schools with $1 million to
spare.

By instituting a
circuit breaker, Governor Romney
acknowledges his formula’s failure and thus introduces, in essence, two
formulas.
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