Areas for Improvement

While the new Education Cost Sharing (ECS) formula takes several steps in the right direction toward equitable and fair funding, there are several areas where improvement is needed.

More than 10 Different Funding Formulas

The new ECS formula only applies to local public schools and maintains Connecticut’s complex and disjointed system of more than 10 different education funding formulas. All other types of Connecticut public schools (magnet schools, local and state charter schools, the Connecticut Technical Education and Career System, agriscience programs, and the Open Choice program) will continue to be funded by different formulas/statutory amounts.

While the ECS formula takes student and community needs into account and provides additional resources for students who are low-income or English Learners, this is not the case for Connecticut’s other school funding formulas. These formulas continue to not be based on student and community needs, and are instead largely arbitrary.

Counting Low-income Students

Under the new ECS formula, low-income students are identified — for purposes of allocating additional funding through a low-income student weight and a concentrated poverty weight — based on whether they are eligible for the U.S. Department of Agriculture's National School Lunch Program (NSLP), known in Connecticut as free and reduced price lunch (FRPL).

Unfortunately, the use of FRPL-eligibility as a proxy for identifying low-income students has become functionally unusable for the purposes of a school finance system, and a new measure for identifying low-income students needs to be used for the ECS formula.

Historically, students were identified as eligible for FRPL by asking families to return paper-based household income surveys to school. However, after Congress passed the Healthy and Hunger Free Kids Act (2010), Connecticut began to adopt a new method of counting low-income students called direct certification. Direct certification is a method by which students can be deemed eligible for no-cost school meals through the NSLP. This provision allows students who are categorically deemed at-risk of hunger to qualify for no-cost meals without needing to complete an application for FRPL.

All Connecticut districts are now participating in direct certification for the NSLP. To reduce the administrative burden on school districts, the U.S. Department of Agriculture has officially eliminated paper-based household income surveys for all schools and districts participating in the Community Eligibility Provision (CEP). As a result, paper-based household income surveys are no longer being collected in these districts, except for when a non-identified student is entering the district for the first time.

Because paper-based household income surveys are not being collected and district FRPL rates are being collected a different way, the ECS formula needs to reflect this change.

For more information about this issue, check out our June 2016 report, Achieving a Better Proxy for Low-income Students in Connecticut, as well as our one-pager, Updating How Connecticut Counts Low-income Students.

Funding Special Education

The new ECS formula does not disentangle special education funding from the ECS grant, and instead leaves state aid for special education “incorporated” into the foundation amount. Approximately 20% of the foundation amount is attributable to special education.

Continuing to incorporate special education funding into the foundation, while also reducing total ECS spending (compared to fiscal year 2017 levels), puts Connecticut at continued risk of violating its federal maintenance of support (MOS) requirement, which is the primary fiscal measure by which states are judged to be eligible for federal funding under the Individuals with Disabilities Education Act (IDEA). To be eligible for federal IDEA funding, a state cannot provide less state financial support for special education than it did in the preceding fiscal year. If a state is found to have failed to maintain support, the U.S. Secretary of Education may reduce federal funds to that state.

By leaving special education funding incorporated into the ECS formula’s foundation, and then reducing ECS funding, Connecticut runs a serious risk of violating its MOS requirement, which could result in the U.S. Department of Education reducing federal IDEA funding to the State. Under Connecticut’s biennial budget for fiscal years 2018 and 2019, the combined special education funding through ECS and the Excess Cost grant is projected to fall short of the level required to fulfill the State’s MOS requirement.

Sticking to the Phase-in Plan

The new ECS formula will be phased-in over 10 years, and over that period, it is projected that overall ECS funding will need to be increased by an estimated $345 million — over fiscal year 2017 funding levels with rescissions — to fully fund all districts according to the formula.

Potential declining revenues and continued growth of fixed costs, including unfunded pension and debt service obligations, are expected to stress the State’s finances for the near future, potentially causing budget deficits. As Connecticut faces significant fiscal challenges ahead, the State could resort to not fully funding the formula or abandon it altogether like it has in the past.

Connecticut stopped using the previous ECS formula because the State did not have enough money to fund the formula’s phase-in plan. With fiscal and economic obstacles, and a longer 10-year phase-in schedule, sticking to the latest formula will be a continual challenge for the General Assembly.