Analysis of Money Distributed
Perhaps you have noticed the Hartford Courant (03-11-21) headline? “Federal stimulus bill will bring billions to Connecticut cities and towns.” I certainly did. And after digging into it, I found estimates of federal money coming to all 169 CT Towns. The Federal money – “FedAid” I call it – comes in two usage categories: (1) Local aid (non-Education) and (2) Education funding.
Purpose of this Article: The Orange Board of Finance wishes to ensure that all taxpayers in Town have a solid understanding of financial matters that can impact the Town financial position and the taxes residents pay. To that end, the following analysis summarizes data across all 169 CT Cities & Towns. My goal is to provide a “snapshot view” of what Orange received from the OVERALL view and how it compares across the State and to other local Towns.
Current Estimates: Orange will receive a total $1,677,954; Local aid of $1,374,954 and Education funding of $303,000. In addition, Amity, our regional school, will receive $528,000. And naturally, there is administrative guidance on both HOW and WHEN this money can be spent.
Restrictions of Use of FedAid: At the moment, there are three areas that towns might spend the Local aid money they’re receiving; responding to the COVID-19 emergency; providing premium pay to essential employees or grants to their employers; and funding government services affected by loss of revenue during the pandemic. And this money is spread out over a few years.
- Combined both Local aid and Education funds received into a Total “FedAid” for each Town. [Note: For Orange, I added 50% of the funding that Amity received to the Orange Total as we pay ~ 50% of that budget; and I did not do that for other Towns.);
- Compared each Town’s FedAid Total to the Town budget, using the latest State of CT data available (2018);
- Compared each Town’s FedAid Total to # Town population, using the latest State of CT data available (2018);
- Ranked the Towns (1 to 169) on the above variables, from High to Low;
- Split the 169 CT Towns into 5 Quintiles: 1 = Highest; 5 Lowest. Each Quintile has 34 Towns; Quintile #5 has 33 Towns;
- Calculated the Average within each Quintile for each variable.
FEDAID To CT Towns Compared To Size Of Town Budget
Reading the Chart: In the above chart, Quintile #1 had the HIGHEST ratio of FedAid compared to their Town budget. The 34 Towns in Quintile #1 received AVERAGE FedAid of 16.41% of their Town budget. Similarly, for the other Quintiles. Locally, West Haven received FedAid that was 21.67% of their budget. Milford received 7.37%. Orange received 2.70%. Derby received 10.61%.
Observations: Much could be said or discussed. Regardless, we can surely all agree there is a SIGNIFICANT difference in the amount of FedAid that each Town received when compared to the Town’s budget. By the way, New London was #1 in CT at 41.47%, with FedAid covering over 2/5ths of its budget; the lowest was Wilton at 1.89%. So, the ratio of highest to lowest of FedAid money received compared to that Town’s budget was a factor of nearly 22.
FedAid To CT Towns Compared To Its Population (Per Capita)
Reading the Chart: In the above chart, Quintile #1 had the HIGHEST ratio of FedAid compared to their Town population (“per capita”). The 34 Towns in Quintile #1 received an AVERAGE of $663 per person. Similarly, for the other Quintiles. Locally, West Haven received FedAid of $773 per resident. Milford received $323 per resident. Orange received $140 per resident. Derby received $436 per resident.
Observations: Once again, we can all see there is a SIGNIFICANT difference in the amount of FedAid that each Town received when compared to the Town’s population. Hartford was #1 in CT at $11,794 per resident; the lowest was Lyme at $98 per resident. So, the ratio of highest to lowest of FedAid money received by a Town compared to its population was a factor of over 18.
If a Town has 10,000 residents, and its FedAid increases by $10 per person, then that Town would receive an additional $100,000 in FedAid. That could pay for two police cars in a Town’s budget. Or an additional teacher. A replacement for a worn-out Truck. Or something else. Or reduce taxes by that amount.
If a Town has 10,000 residents, and its FedAid increases by $50 per person, then that Town would receive an additional $500,000 in FedAid. As you can see, that is a substantial amount.
In my view of the analyses presented, the variation of FedAid coming to all 169 CT Towns is significant, Highly Significant in my view. In addition, Towns seemingly close by each other – and similar in character – receive far different treatment. For example: if Orange received the Milford $323 per capita rate instead of the $140 Orange rate then Orange – were it treated like Milford—would have received an additional $2,555,463 in FedAid. Something to think about.
by Jim Leahy, Vice-Chairman, Orange Board of Finance