Needs-Capacity Formula

This one-pager from the School and State Finance Project details how Connecticut could use a needs-capacity formula to distribute non-education municipal aid to the state's cities and towns. A needs-capacity formula is based on a municipality's socioeconomic and physical characteristics and considers its costs of delivering a common level of service and its capacity to raise revenue to pay for those services. Under a needs-capacity formula, municipalities with the greatest level of fiscal disparity would receive a greater level of state funding, while municipalities with the capacity to pay for services through their own revenue raising capacities receive less or no state funding.