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State Funding Guarantee, Formula, or Both – Know Your Trend

By Meghan Homsher posted 24 days ago


by Meghan Homsher and Ernie Strawser

State Funding Trends

Property values have significant influence over your per-pupil state funding.   With the recent rise in property values, many districts are experiencing noticeable change in their state funding revenue forecast. In many cases, the change is unfavorable. When reviewing the impact of values on FSFP funding, consider that higher values can reduce your state share of per pupil funding. In this example, by FY 2028 the district is trending toward a per pupil state funding loss of about $300.   Property values could be a leading indicator of the district’s future state funding results. 

 Know Your District’s Trend
When considering the impact of higher values on state funding, keep in mind district status as funded via formula or guarantee, (receiving transitional funding to maintain par with their FY 2020 and FY 2021 levels). In FY 2024, there are about 155 guarantee districts which is an increase over past years. Simulations show it’s possible that an additional 35 districts could become guarantee districts as soon as FY 2025 when tax year 2023 values first begin working into the state aid calculation. 
When the current era of property reappraisals is fully integrated into the state’s funding formula, many districts like this one could find themselves losing revenue year-over-year.  While tax year 2023 values are first included in FY 2025 state funding calculations, it is not until FY 2027 that all three years of tax values reflect the current increase. While our example district begins FY 2025 as a formula district, its revenue trend is year-over-year loss and a trend toward guarantee of as much as $977,071. The implication is that a significant component of this district’s revenue could become stagnant, thus reducing the district’s ability to keep up with increasing program costs.   

In today’s world of software capability your stakeholder expectations are heightened, knowing your state funding trend will:

  • Provide a more credible financial forecast;
    Serve as a better basis for decisions;
    Empower district leader advocacy on behalf of students and taxpayers, and 
    Enable more effective messaging of the district’s financial trajectory.