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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
Perspectives
Index
Perspectives
on Education
Issues
When School
Expenses Rise,
by Allen Larson
Perspectives
on Housing
Issues
METHODOLOGY
AND FORMULA
FOR COMPUTING THE
MEDIAN INCOME OPTION
Median Income Option Methodology
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As a starting point, the Median Income Option taps into the consensus in most Chapter 70 proposals that a community with wealth indicators at the state average has the ability to pay 75 percent of its school costs, with the state paying the balance in Chapter 70 funds.
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As a town’s median income increases above the state average, it receives less in Chapter 70 funds, and vice versa. The Median Income Option uses the average median income per capita measured over the most recent 3 years that data are available.
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The primary building block of the Median Income Option is the current foundation budget. This will, in effect, build components into the Median Income Option to reflect enrollment growth. As a school’s population grows or declines, so does its Chapter 70 funding. This element was borrowed from former Governor Jane Swift’s proposed “target share” formula.
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The median income for regional school districts is not tracked by the Department of Revenue. Therefore, the median income percentages used in the Median Income Option are averages of all the towns in a particular school district
Median Income Formula
Barnstable
| A. Foundation budget | = $46,661,440 |
| B. Town share of foundation budget = 75 percent | = $34,996,080 |
| C. Multiply B times 87 percent median income | = $30,446,590 |
| D.
Subtract C from A = Chapter 70 |
= $16,214,850 |
| E. Percent of foundation budget | = 34.7 percent |
Barnstable chooses median income formula:
$6,105,388 – with FY04 final Chapter 70
(13.08 percent of foundation
budget)
Attleboro
| A. Foundation budget | $47,181,549 |
| B. Town share of foundation budget = 75 percent | $35,386,162 |
| C. Multiply B times 87.80 percent median income | $31,069,050 |
| D.
Subtract C from A = Chapter 70 |
$16,112,499 |
| E. Percent of foundation budget | 34.2 percent |
Attleboro chooses property tax formula:
$26,034,470 – with FY04 final Chapter 70
(55.2 percent of foundation
budget)