Reports & Publications

The State of Connecticut contains 169 towns with a wide range of wealth and resident need. Currently, the State of Connecticut provides financial aid to towns through a variety of statutory and non-statutory grant programs. The current structure for non-education town aid does not sufficiently address the underlying municipal fiscal disparities that are caused by the unequal costs of delivering services and the low revenue raising capacity of towns in Connecticut. The purpose of this policy briefing is to introduce and examine how Connecticut can address municipal fiscal disparities by using a needs-capacity formula to distribute non-education town aid.

While the Connecticut General Assembly typically passes budget revisions as a part of regular legislative sessions during even-numbered years, the coronavirus pandemic brought the 2020 legislative session, and any budget revisions, to a halt. This frequently asked questions document looks at what this means for the State of Connecticut’s fiscal year 2021 budget and for municipal aid, including Education Cost Sharing (ECS) grants.

The State of Connecticut recently increased the level of oversight and monitoring of the finances of its 169 municipalities with the creation of the tiering system in 2017. The tiering system categorizes fiscally distressed municipalities based on their fiscal health and stability. The level of oversight and involvement by a designated statutorily created board increases as the fiscal health of a given municipality is deemed less secure. This policy briefing details this oversight, discusses the boards that oversee and work with municipalities, and examines the authority granted to these boards to improve the fiscal health of municipal finances.

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.

This frequently asked questions document discusses Connecticut’s minimum budget requirement (MBR), which prohibits a town from budgeting less for education than it did in the previous year unless it meets specific exceptions.