The model assumes continuation of the current system, in which the state guarantees every school district a minimum per-pupil revenue. The state is proposing $5,445 as the per-pupil guarantee for FY 1998.80 Under the statutes which accompanied Proposal A, some school districts are spending less than this formula guarantee, and many are spending more. As a consequence of the Proposal A reforms, the variation between the lowest and highest spending school districts is being substantially reduced while the average revenue is rising sharply.81 The model assumes that this per-pupil foundation grant can be used to reasonably predict the overall revenues of the school system. As noted above, multiplying the state foundation grant by the number of students in the government system will actually substantially underestimate the total state expenditures to support the system. However, this underestimate would be roughly proportional to the same underestimate in a tuition tax credit scenario.

Using the 1998 budget recommendation as a starting point, we assume that the state per pupil grant guarantee will increase at 3 percent per year for the following ten years. Therefore, for the school year starting in the fall of 1998 (FY 1999), the basic foundation allowance is calculated to be $5,608, which represents a 3-percent increase from the FY 1998 figure of $5,445.82