Agency: Minimum School Program

Function

The Minimum School Program (MSP) is the largest budget program annually appropriated by the Legislature and supports the operation of all public schools in Utah. The MSP provides the primary revenue source for Utah's school districts and charter schools, collectively known as Local Education Agencies (LEA). Utah's LEAs currently enroll more than 600,000 students. Program revenues support educational activities in all grades including pre-kindergarten through the 12th grade. In most instances, state revenue distributed through the MSP to the public schools is conducted on a formula basis.

Three major programs collectively comprise the MSP; the Basic School Program, the Related to Basic School Program, and the Voted & Board Leeway programs. In addition to these programs, the MSP accounts for other one-time appropriations made by the Legislature for distribution to school districts and charter schools.

Funding appropriated by the Legislature for education programs included in the MSP is directly distributed to school districts or charter schools. The Utah State Board of Education receives the appropriation and transfers funding to the appropriate education entity using distribution formulas established in statute. Statewide education programs that are not directly distributed to school districts or charter schools (i.e. Request for Proposal Programs, Grants, etc.) are appropriated to the State Board of Education through one of the nine line-items for the Utah State Office of Education.

Funding received through the MSP, combined with local property tax revenues and federal funds, assists districts and charters in meeting the expenses of operating public schools. These expenditures include employee salaries and benefits, class size, school construction and renovation, curriculum, textbooks and supplies, along with a myriad of other educationally related expenses. The local boards each year will determine the level of funding available for each program offered in the district or charter school, as well as, the level of employee compensation increases. Compensation issues are determined through local contract negotiations regardless of Legislative funding decisions or increases provided to the overall value of the MSP.

Revenue Distribution -- the MSP is designed to distribute equalized state and local revenue to school districts and charter schools. "To a degree, the Minimum School Program acts as a series of large block grants provided by the state to support local level educational services" (LFA, Minimum School Program Compensation, July 2005). Local boards of education, as well as charter school governing boards, have the discretion and responsibility for allocating funding based on the unique circumstances of the district or charter school. Revenue distributed through the program “is not a plan of expenditure or ‘budget' for the LEA [i.e. school district or charter school] to follow" (LFA, Minimum School Program Compensation, July 2005).

Public Education Budget Amendments -- are unique pieces of legislation in comparison with other budgetary acts (bills) passed each year by the Legislature. Passage of the Public Education bill often amends and revises codified statute. This allows the Legislature to change statutes governing public education in conjunction with appropriation decisions. It also brings relevant laws into review each legislative session. Included in this bill are other provisions that outline the intent of the Legislature and appropriation of one time funding for certain programs.

MSP Data Consensus - two major data sets significantly impact the overall cost of the MSP. The first is the projected number of students that will enroll in schools across the state. The second is the value of assessed property used to estimate local property tax revenues generated through the Basic Rate to support the MSP.

Each year the Office of the Legislative Fiscal Analyst meets with representatives from the Governor's Office of Planning and Budget and the State Board of Education to establish consensus estimates for student enrollments and assessed valuations. This ‘Common Data Committee' also includes representatives from the Utah State Tax Commission (when reviewing assessed valuations), the Utah Education Association, and other interested individuals and organizations. Consensus estimates generated through the committee process ensures that each entity uses the same base data throughout the budgeting process.

Enrollment Projections -- the method utilized to project student enrollment has historically provided a relatively accurate basis for determining MSP appropriations. Representatives from the Legislative Fiscal Analyst's Office, the Governor's Office of Planning and Budget, and the State Office of Education develop independent enrollment projections each year. The offices use methodologies which include historical trends, district reporting, birth statistics, mortality rates, and any number of other factors to try to estimate student enrollment numbers. Upon the completion of these independent estimates, the offices meet together as the Common Data Committee to reach agreement on a common projection of student enrollment for the coming school year.

Student Enrollments -- a total of 600,970 students enrolled in Utah's public schools for the 2012-13 school year. This was an increase of 2.1 percent over the prior school year, for a total student increase of 13,225 students. Projections indicate that the public schools will enroll approximately 13,254 more students in fall 2013, an increase of 2.2 percent over fall 2012.

Background

Utah statute, 53A-17a-103, defines the Basic School Program (BSP) as "public education programs for kindergarten, elementary, and secondary school students that are operated and maintained for the amount derived by multiplying the number of weighted pupil units for each district by [the value of the weighted pupil unit]." Further, the BSP equalizes a portion of local property tax revenue, called the Basic Levy, collected by each school district with state revenue appropriated to support the program. Funding equalization, as well as revenue distribution to districts and charter schools, is done on a weighted pupil basis. This equalization mechanism partially accommodates the revenue differences between ‘richer' and ‘poorer' school districts.

Since charter schools do not have the ability to levy property taxes, they do not contribute to the BSP like school districts. Although charter schools do not contribute funding to the BSP, students attending charter schools receive the same level of funding as a similarly situated student attending a district school.

Revenue Equalization -- through the BSP, the state and local school districts share in the cost of educating Utah's school children. Statute recognizes that "all children of the state are entitled to reasonably equal educational opportunities regardless of their place of residence in the state and of the economic situation of their respective school districts or other agencies" (UCA 53A-17a-102(1)). As mentioned above, formulas distributing MSP revenues function in a manner to equalize revenue among school districts and charter schools and to provide ‘reasonably equal educational opportunities.'

Although the establishment of an educational system is largely a state function, Utah statute indicates that school districts also have a responsibility in providing funding to support the state's public education system. "School districts should be required to participate on a partnership basis [with the State] in the payment of a reasonable portion of the cost of a minimum program" (UCA 53A-17a-102(2)). Statute authorizes each school district to assess a minimum basic property tax levy to contribute to the MSP. “In order to qualify for receipt of the state contribution toward the basic program [of the Minimum School Program], and as its contribution toward its cost of the basic program, each school district shall impose a minimum basic tax rate per dollar of taxable value" (UCA 53A-17a-135(1)(a)). The minimum basic property tax levy is assessed by each of the 40 school districts and each district assesses the same basic property tax rate.

Basic Levy -- school districts must impose the Basic Levy in order to participate in the MSP. The state contribution to the BSP of a school district equals the difference between the proceeds of the basic levy and the cost of the basic program. If the proceeds of the basic levy "equal or exceed the cost of the basic program in a school district, no state contribution shall be made to the basic program" (UCA 53A-17a-135(3)(a)). If the proceeds from the basic levy exceed the cost of the basic program in a school district, statute includes a ‘recapture' provision. Recaptured revenue is deposited in the state's Uniform School Fund which supports state appropriations for public education.

The Legislature establishes the Basic Tax Rate required of all school districts in statute each year.

Weighted Pupil Unit -- the WPU acts as the common factor used in estimating program costs and distributing program revenue. The WPU is "the unit of measure of factors computed in accordance with the Minimum School Program Act, for the purpose of determining the costs of the basic school program on a uniform basis for each student" (UCA 53A-17a-103(6)). The WPU represents one pupil in average daily membership (ADM). Specific programs in the MSP may generate fewer or additional WPUs based on statutory guidelines. Most often, this is a specified student qualification. For example, students enrolled in kindergarten generate .55 of a WPU where students enrolled in Special Education may generate more than one WPU. Explanation of MSP programs found throughout this section will provide information on how WPUs are generated for each basic school program.

WPU Value -- each year, the Legislature establishes the dollar value for each WPU for the upcoming fiscal year. Funding levels for each of the Basic School Programs is determined by the number of WPUs allocated to the program multiplied by the value of the WPU. "When the Legislature provides an increase to the value of the WPU it is increasing the overall value of the Minimum School Program as allocated equally among LEAs [i.e. school districts/charter schools] based on their respective WPU count" (LFA, Minimum School Program Compensation, July 2005).

The WPU Value generally increases each fiscal year, as determined by the Legislature. Since the creation of the Weighted Pupil Unit in 1974 the WPU Value has never decreased. In fiscal years 1988, 1989, 2010, and FY 2011 the WPU Value was not increased and in fiscal years 2003 and 2004 the value increased less than one percent. In the remaining years since 1974, the annual percent increase in the WPU value ranged from a high of 11 percent in FY 1981 to a low of 1.5 percent in FY 2005.

Comparisons of annual WPU values since 1974 do not show potential decreases in the WPU value that may have occurred during the course of a fiscal year. For example, some indicators suggest that there may have been a mid-year decrease in the WPU value during the mid-1980s - basically a reduction in WPU value from the original appropriation to a revised appropriation. However, based on data from annual appropriations reports the final WPU value for each fiscal year has been at least the same, if not greater than, the prior fiscal year.

Statutory Authority

The Minimum School Program is governed by Title 53A, Chapter 17a of the Utah Code.

• UCA 53A-17a-101 et. seq. -- Sections 101 through 163 provide detail on the Minimum School Program and its various subprograms. Section 102 states that "the purpose of this chapter is to provide a minimum school program for the state in accordance with the constitutional mandate" (UCA 53A-17a-102).

Funding Detail

The budget for the Minimum School Program is divided into three sections, namely, MSP-Basic School Program, MSP-Related to Basic School Program, and MSP-Voted & Board Leeways. Please refer to these sections for more detail on the budget. The table below consists of total MSP nonlapsing balances prior to FY 2012. Beginning in FY 2012, nonlapsing balances are accounted for in each of the MSP categorical program budgets.

Table 1: Operating and Capital Budget Including Expendable Funds and Accounts