2004 Session

Budget Amendments - HB30 (Member Request)

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Chief Patron: Watts
Composite Index Formula Adjustment

Item 146 #25h

Item 146 #25h

First Year - FY2005 Second Year - FY2006
Education: Elementary and Secondary
Direct Aid To Public Education FY2005 $159,600,000 FY2006 $207,100,000 GF

Page 105, line 15, strike "$2,920,427,133" and insert "$3,080,027,133".
Page 105, line 15, strike "$2,934,464,120" and insert "$3,141,564,120".
Page 108, after line 42, insert:
"e.  The Department of Education shall compute the composite index of local ability-to-pay for localities that reflect the components (i) incorporate tax values and population estimates for the fiscal year ending one year prior to the fiscal biennium in which the distribution takes place; (ii) provide for a population density adjustment in certain localities; and (iii) incorporate median, rather than average, adjusted gross income as developed by certain recommendations from the Joint Legislative Audit and Review Commission's report Review of Elementary and Secondary School Funding.  However, after the population density adjustment is applied to the raw composite index of these localities, the .8000 cap shall still apply."

(This amendment provides additional funds primarily to localities where the population densities are higher than the state's average. Secondly, the proposed changes would reflect a more current update to a local government's ability to pay for public education by utilizing the prior fiscal year's data to the budgeted biennium for the true value of real estate. Lastly, the composite index formula would use the median income rather than the adjusted gross income. It reflects the fact that cities and counties with a relatively high personal income (which is used as a proxy for other taxation indices) do not actually benefit from said persons' income taxes - rather the state does - and that average income is a poor proxy for taxing potential. In order to more accurately reflect "ability to tax," the state should rely on median income, which finds the most common income amount, and not the average.)