Needs-Capacity Formula

Feb 19, 2020

School + State Finance Project Original Content

This one-pager from the School and State Finance Project details how Connecticut could use a needs-capacity formula to distribute non-education municipal aid to the state's cities and towns. A needs-capacity formula is based on a municipality's socioeconomic and physical characteristics and considers its costs of delivering a common level of service and its capacity to raise revenue to pay for those services. Under a needs-capacity formula, municipalities with the greatest level of fiscal disparity would receive a greater level of state funding, while municipalities with the capacity to pay for services through their own revenue raising capacities receive less or no state funding.


School and State Finance Project. (2020). Needs-Capacity Formula. New Haven, CT: Author. Retrieved from

  • School + State Finance Project Reports
  • Municipal Aid & Spending