Proposal would phase in lower excess-spending threshold and create grants for 20 low-spending, high-poverty school districts

A draft package presented to the Finance committee would convert the excess-spending threshold into the Act 73 base amount and phase that statutory base in by FY2030 while creating a categorical grant targeted to the lowest-spending, highest-poverty school districts.

The clerk in the financial office, speaking to the committee, said the technical approach is to “put 15,033 as the new ... spending threshold into statute” and then ramp into that base over several fiscal years so the threshold and the foundation formula converge by FY2030. John Gray, operations staff for the council, reiterated the conversion: “We got 15,033 as adjusted for inflation,” and described splitting the excess-spending definition into a separate base and threshold so each can be manipulated independently.

Why it matters: the proposal would change how the excess-spending penalty is calculated and would direct a portion of revenues toward a targeted grant program. That could stabilize district budgets during the state’s move to a foundation formula but would require statutory appropriation and depend on how much revenue is actually raised from districts that choose to spend above the threshold.

Under the draft grant design, a district must meet three conditions to qualify: operate at least one grade (partially or fully operational); have at least 45% of students identified as economically disadvantaged; and rank among the 30 lowest per-weighted-pupil spending districts. Staff modeled the eligibility using FY27 data and said 20 districts meet those criteria.

Grant amounts would be tiered by long-term weighted membership and determined by quartile splits. As an example of the tiering approach, staff said districts with 0–650 long-term weighted students would receive $250,000, larger districts would receive proportionally larger grants, and the full, non‑prorated cost of the program was estimated at about $12.5 million using FY27 data. Committee members and staff emphasized that the appropriation would be statutory categorical aid and would be prorated if the revenues raised from excess-spending overages in a prior year did not cover the total.

Staff described how the model was built: they used the Agency of Education FY27 budget data to produce a district-by-district spreadsheet (columns included county, district name, long-term weighted membership, percent economically disadvantaged, weighted per-pupil spending, rank, grades operated and a partially-operational flag). Staff offered to circulate a cleaned spreadsheet and hard copies to committee members for review.

Committee members asked several design questions—whether grants should be further targeted, how quartiles were chosen, and whether Title I or pilot districts were implicated—and staff responded that the eligibility construct was a policy choice and could be revisited. Staff also cautioned that the amount raised from the excess-spending threshold depends on district property-tax rates and on whether districts choose to change spending behavior; accordingly, the $12.5 million is the modeled full cost before any proration or behavioral response are applied.

Next steps: staff said drafting language exists for the committee and that spreadsheets and printouts will be circulated; members agreed to review materials and reconvene for further discussion before a formal vote or statutory action.