Note on the Proposed Apportionment Formula for Chapter 70 Aid

Steven Miller (sjm1@williams.edu)

PROBLEM: Currently the state tells us how much Chapter 70 aid goes to each of LES, WES and MtG; if we regionalize then we are
only told the total amount going to the three schools, and not the individual breakdowns. To allocate fairly future monies as in the
past, it is necessary to figure out what percentage should be credited to each schools budget going forward. While the state does not
share the formula they use, we have years of data on how much funds each school has received, which we can use to approximate
quite well the percentage splits. The formula below does an excellent job describing what has happened in the past, and predicted
the 2018 amounts to within just a few thousand dollars (out of $3.5 million). Note if we can approximate the splits to within 1 to 2
percent then each town benefits financially, as even if one receives slightly less Chapter 70 aid then one would have if regionalization
didnt occur, one receive more money from Chapter 71 aid (regional transportation subsidies that are eligible only for regions).

SOLUTION: We use Linear Regression to allocate future funds based on the following inputs: foundational enrollments of each
school, and EQV assessments of each town. We use these as the variables for the following reasons.

1. These are the parameters used in determining capital cost splits between the towns; that formula was recently revised and
overwhelmingly supported in both towns just prior to the Mt Greylock Building Project.
2. We capture the key features (number of students in the building, wealth of the towns).
3. The method is standard and has been successfully used for over 200 years.
4. The process is completely transparent; once we state the data used for predicting the splits and the parameters of the model,
the explicit formula is uniquely specified. Thus there are no additional assumptions or arguments, and anyone doing the
analysis obtains the same answer.

RESULT: Below is a comparison of the predicted versus observed splits. Notice the predicted formula agrees extremely well with the
observed percentages, and differs by less than .3% (i.e., three tenths of one percent) for each school for 2018.

Below is the predicted versus actual Chapter 70 splits for 2018 (predicted values obtained by using data from 2007 through 2017).
Predicted % Actual % Difference
LES: 21.7826 22.0248 -0.242194
WES: 27.8397 27.8767 -0.0369861
MtG: 50.3776 50.0984 0.279181
Note the sum of the three predictions is 100%. Further, in 2018 the Chapter 70 funds come to $3,489,437; one precent of that is
approximately $35,000 while .3% is about $10,500.
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APPENDIX: Explicit Formula for Chapter 70 School Splits

For each school we want to find coefficients to determine what percent of the total Chapter 70 funds go to that school,
given enrollments and EQVs. For example, for LES we need to find variables 1,LES, , 6,LES such that

Percent to LES = 1,LES + 2,LES FELES + 3,LES, FEWES + 4,LES FEMtG + 5,LES EQVL + 6,LES EQVW.

The best values of the s are explicitly given as (XT X)-1 XT yLES, where X is a matrix whose rows are the values of the
foundational enrollments and EQVs each year, and the vector y is the observed split going to the school each year. Note
the data matrix X is the same for all three schools; only the y vector (the observed percentage of aid going to the school)
changes. Among all models that are linear combinations of the observables, the above regression formula has been shown
by mathematicians / statisticians to be optimal in giving the best linear unbiased estimator of the coefficients. Additionally
the three percentages will always add to 100%, and small changes in any population or EQV will have only small changes
in the splits.

Using the data from 2007 through 2017, we obtain the following formulas.

LES percentage:

36.9758 + 0.0312752 LES(pop) - 0.0260593 WES(pop) - 0.036852 MtG(pop) - 47.8921 L(EQV) + 26.2704 W(EQV)

WES percentage:

24.769 - 0.0145133 LES(pop) + 0.0101107 WES(pop) + 0.0107294 MtG(pop) + 13.4849 L(EQV) - 8.69672 W(EQV)

MtG percentage:

38.2552 - 0.0167619 LES(pop) + 0.0159486 WES(pop) + 0.0261226 MtG(pop) + 34.4071 L(EQV) - 17.5737 W(EQV)