Thursday, January 29, 2015

Assessed Valuation Per Pupil - Why Does it Matter?

In the world of school finance, one will often hear about the "assessed valuation per pupil" (AVPP) and how it does or doesn't impact school district revenue. At the simplest level, the AVPP is an indicator of the amount of revenue a school district can raise for appropriate purposes through the local tax base. The AVPP can vary widely across the state due to the relative property wealth of individual districts. Here are some samples of AVPP at the conclusion of the 2013-14 school year:

Galena, USD 499 
  • Value of real property - $16,457,768
  • AVPP - $20,251
Newton, USD 373
  • Value of real property - $151,120,077
  • AVPP - $43,852
Burlington, USD 244
  • Value of real property - $390,951,572
  • AVPP - $479,577
If you think about the fact that a district's property wealth (or lack thereof) is what drives local tax revenue, you can begin to see the disparity pretty clearly. Obviously, a 1 mill tax levy in Galena will raise significantly less than the same tax levy in Burlington (1 mill is equal to $1 for every $1,000 of assessed valuation). If school districts relied solely on what they could raise locally, there would be a tremendous disparity among districts in terms of what programs, supports, and facilities could be offered to students.

These factors are exactly why the school finance formula currently contains a method for "equalization." In other words, the state utilizes a mathematical formula to determine how much a school district should receive in equalization aid - which helps to ensure your zip code doesn't dictate what quality of school your kids attend. Equalization aid is applied to the district's Supplemental General Fund (or Local Option Budget - aka LOB), Capital Outlay Fund, & Bond & Interest Fund. 

In Newton, the combination of state aid in these three funds for the current school year is budgeted to be nearly $6,900,000. Equalization matters...a lot!

© 2015 Russell K. Miller, EdD

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