The general assembly recognizes that Rhode Island cities and towns primarily rely on the local property tax to finance education programs, and that the state’s highest effective property tax rates are concentrated in the state’s urban communities. Therefore, certain communities, because of low tax capacity and high tax effort, are unable to appropriate sufficient funds for the support of core instructional programs. The general assembly also recognizes the need to reduce inequities in resource distribution among the state’s cities and towns as well as among the state’s districts and schools. Therefore, the general assembly establishes the Core Instructional Equity Fund to improve the capacity of cities and towns to support the core instruction activities that are the basis of daily teaching and learning in all classrooms. The general assembly shall annually appropriate and distribute some sum to meet these needs. The sum shall be distributed based upon the following formula:

(1) Data.  Data used for the following calculations are defined as follows:

(i)  Population (state and municipal) shall be included from the most recent census;

(ii)  Equalized weighted assessed valuations (EWAV) from the most recently completed and certified study pursuant to § 16-7-21;

(iii)  Most recent tax data certified by the local assessors to the department of administration, and core instructional per pupil cost as determined by the commissioner of elementary and secondary education;

(iv)  Most recent resident average daily membership (ADM) pursuant to § 16-7-22;

(2) Methodology.

(i)  Community Property Tax Capacity Index Calculation

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Calculate statewide tax rate:

Step 1:  total statewide property tax yield/total statewide property tax base (EWAV) = state average tax rate

Step 2:  calculate statewide yield per capita:

Total statewide property tax yield/state population (most recent census) = state property tax yield per capita

Step 3:  calculate municipal property tax yield per capita:

Municipal property tax yield/population = municipal property tax yield per capita

Step 4:  calculate municipal property tax capacity:

(Municipal property tax yield per capita/state property tax yield per capita) * 100 = Community property tax capacity index

(ii)  Total Tax Capacity Index Calculation:

Step 5:  calculate community hypothetical property tax yield per capita:

(Statewide tax rate * municipal property tax base (EWAV))/community population = Hypothetical community property tax yield per capita

Step 6:  calculate total tax capacity index:

(Hypothetical municipal yield per capita/state average property tax yield per capita) * 100 = total tax capacity index

(iii)  Tax Effort Index Calculation:

Calculate property tax effort calculation:

Step 7:  (Municipal property tax yield per capita/hypothetical municipal property tax yield per capita) * 100 = Property Tax Effort Index

(iv)  Capacity/Effort Index

Calculation of the equity index:

Step 8:  (Property tax capacity index/tax effort index = Equity index

(v)  Instructional Cost Per Pupil

Calculate the instructional cost per ADM:

Step 9:  core instructional district cost/district ADM = per pupil core instructional district cost

Step 10:  select the statewide average per pupil instructional cost

Step 11:  state average per pupil core instructional cost – district per pupil core instructional cost = core gap

Step 12:  core gap * ADM = weighted difference.

(3) Eligibility to receive funds.  Only those districts which have a gap in instructional core funding and which have capacity of less than 0.50 per the equity index are eligible to receive funds under this provision.

(4)  For FY 2003, districts shall receive the greater of the dollar amount received in FY 2002 or the dollar amount calculated as the FY 2003 entitlement. For FY 2003, ten percent (10%) of these funds shall, in addition to the purposes enumerated above, be used to increase student and school performance, and shall be only spent with the prior approval of the commissioner of elementary and secondary education.