Reforming Connecticut’s Education Aid Formula to Achieve Equity and Adequacy across School Districts - Research Report 21-1 - February 2021

Oct 15, 2026

Uploaded by Connor

Connecticut’s public K–12 education system depends heavily on local funding, creating persistent disparities between affluent and low-income districts, especially those serving more socioeconomically disadvantaged students. Despite improvements, the state aid formula has been criticized for not delivering sufficient funding to districts facing the highest education costs and the fewest resources. This report estimates a “cost-capacity gap” comparing education costs and revenue capacity, then designs gap-based state aid formulas to improve equity and adequacy through statistical analysis and policy simulations.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages23

Reading Time58 min

AccessFree to download

Executive Summary

I. Introduction

II. Measuring Education Cost

III. Measuring Revenue Capacity

IV. Measuring the Cost-capacity Gap

V. Designing Gap-based Aid Formulas

VI. Conclusion

New England Public Policy Center Reforming Connecticut’s Education Aid Formula to Achieve Equity and Adequacy across School Districts By Bo Zhao RESEARCH REPORT 21-1 February 2021 New England Public Policy Center [www.bostonfed.org/neppc](www.bostonfed.org/neppc) Staff Katharine Bradbury Mary Burke Nicholas Chiumenti Melissa Gentry Lan Ha Osborne Jackson Morgan Klaeser Samuel Makakalli Darcy Saas Riley Sullivan Jeffrey Thompson Bo Zhao The views expressed in this report are those of the author and do not necessarily represent positions of the Federal Reserve Bank of Boston or the Federal Reserve System. Table of Contents Executive Summary ................................................................................................3 I. Introduction .........................................................................................................4 II. Measuring Education Cost.................................................................................6 III. Measuring Revenue Capacity ...........................................................................8 IV. Measuring the Cost-capacity Gap................................................................. 10 V. Designing Gap-based Aid Formulas .............................................................. 13 VI. Conclusion ....................................................................................................... 18 - EXECUTIVE SUMMARY Connecticut’s public K–12 education system relies heavily on local funding, resulting in substantial disparities between affluent districts and low-income districts with a large proportion of socioeconomically disadvantaged students who are more costly to educate. Despite recent improvements, the existing state aid formula has been criticized for failing to provide sufficient funding to districts with the fewest resources and the highest education costs. To help improve state aid distribution, this report estimates a “cost-capacity gap,” which measures the difference between a district’s education cost and revenue capacity and uses it asan indicator of the district’s need for state education aid. The report proposes a series of state aid formulas based on the gap measure that Connecticut policymakers may use to improve equity and adequacy in education funding. Through rigorous statistical analysis of recent data, this report measures each school district’s education cost and revenue capacity based on factors that are outside the direct control of local officials at any given point in time. The cost factors include, among others, the percentage of school-age children from families living in poverty and the percentage of students living in single-parent or non-family households. The revenue capacity estimate for each district is based mostly on taxable property wealth. The analysis shows large disparities in the cost-capacity gap across the state. While districts with larger gaps, on average, receive more per-pupil state aid under the current formula compared with smaller-gap districts, the largest-gap districts still receive less aid than they need to close their cost-capacity gaps. Asa result, inequity and inadequacy remain in the state’s education finance system. The policy simulations show that the gap-based formulas introduced in this report address funding inequity and inadequacy more effectively than the existing formula does. Some of these new formulas incorporate tools intended to enhance their appeal to state legislators whose communities do not have large cost-capacity gaps. These tools include minimum and maximum levels of perpupil state aid and a hold-harmless provision. However, a gap-based formula that contains any of these tools would fail to fully eliminate funding inequity and inadequacy and require a larger state aid pool than would be needed otherwise. FEDERAL RESERVE BANK OF BOSTON 3 ~~ ~~NEW~~ ~~ENGLAND~~ ~~PUBLIC~~ ~~POLICY~~ ~~CENTER~~ ~~RESEARC

FAQs

What problem does the report identify with Connecticut’s current education aid formula?

The report argues that the existing state aid formula does not provide enough funding to districts with the fewest resources and the highest education costs, leaving equity and adequacy issues unresolved.

How does the report measure district need for state education aid?

It estimates a “cost-capacity gap,” defined as the difference between a district’s education cost and its revenue capacity, using cost and revenue factors outside local officials’ direct control.

Do the proposed gap-based aid formulas improve equity and adequacy?

Yes. Policy simulations indicate the gap-based formulas address funding inequity and inadequacy more effectively than the existing formula, though certain design tools can require a larger state aid pool.

Oct 15, 2026

Uploaded by Connor