Financial Implications of School Choice
Presentation Notes from Jim Rier, Director of School Finance and Operations at the Maine DOE
1. In general how are public schools funded?
- EPS creates an allocation (cost of education) for each SAU.
- Each SAU (or member municipality of a multi-town SAU – RSU/SAD/CSD) is required to contribute a local share of that EPS generated allocation.
- Review an SAU EPS ED270 calculation and highlight cost components, required local share and subsidy. Cape Elizabeth (low receiver) contracts with RSU 39 Caribou/Limestone/Stockholm (high receiver).
- Because it will be important to your discussion – review new student impact on calculation.
2. What options currently exist for resident students of an SAU?
- SAUs that operate K-12 schools:
- Parent could opt to have their student attend another pubic of private school. Parent would be responsible for tuition and transportation.
- Parent could seek to have their student attend another public school unit through what is known as a superintendent’s agreement – more about that later.
- SAU’s that do not operate all grades K-12:
- Choice exists for grades not operated by the SAU.
- Tuition is paid by resident SAU to schools approved for receipt of public funds up to the maximum allowable rate set each year. Some exceptions exist in current law. If private schools charge more than the maximum allowable rate, the parent is responsible for the difference. Tuition costs are supported in the EPS calculation for the grade levels not operated by the resident SAU.
3. Review choice funding provisions in the legislation proposed last year.
How much funding and when funds follow the student: For the most part, it's as if the student had become a new resident of the choice school unit. The resident subsidizable count would increase for the new attending unit and decrease for the prior (resident) unit. EPS allocation would increase in the choice unit and decrease in the prior unit.
Review Cape Elizabeth again to illustrate the effect of a grades 9-12 resident student in Gorham (relatively high receiver, 61.41 percent) exercising choice to attend Cape (low receiver, 12.8 percent). Last year’s choice proposal allowed that to happen if the Cape school board allowed a certain number of “open seats” in Cape. In this example, virtually the same allocation and subsidy would move from Gorham to Cape. We will discuss the timing of the funds moving later.
Now let’s look at another example – a grades 9-12 resident student in Sanford (a relatively high receiver, 63.73 percent) exercising choice to attend Wells Ogunquit CSD (a minimum subsidy receiver, 5.72 percent). In this example the allocation and subsidy would be reduced in Sanford. While the allocation would be increased in Wells Ogunquit, the subsidy would not. That exact same thing would happen if the parent moved from Sanford to Wells.
4. Now for timing of allocation and subsidy.
In general, the allocation and subsidy decrease/increase would occur by one half in the second year and full in the third year of attendance at the choice school. Again, this is what would occur if the parent moved to the choice SAU or if a superintendents' agreement had been in place for the student. The provisions of last year's proposed legislation would have accelerated that to full starting in the second year.