This story is part of CT Mirror Explains, an ongoing effort to distill our wide-ranging reporting into a "what you need to know" format and provide practical information to our readers.

Connecticut children are now back to school and state government is making an unprecedented investment in their education this year — at first glance.

But while the Education Cost Sharing grant, the formula that represents the state’s chief operating assistance for local school districts, will dedicate almost $2.5 billion to local districts this fiscal year, more than 10% of the General Fund, critics say the program has lagged inflation for years, causing huge disparities in school funding between wealthy and poor communities to worsen. 

Here’s what you need to know about a problem that has befuddled legislators, governors and courts for decades.

How does the ECS formula work?

Though it never has created parity in school funding, the ECS formula is designed to move Connecticut closer toward equality.

And it begins with a “foundation” level, a basic assumption that it costs about $11,525 to educate one student in Connecticut.

From there, the formula adjusts this per pupil expenditure based on how many students a district serves from low-income households. It particularly focuses on pupils who are eligible for free or reduced-price meals or who speak English as a second language.

It also considers a city or town’s wealth in two ways, looking at the value of its taxable property as well as the income of its residents.

Hoping to encourage cooperation and efficiency savings, the state also provides a bonus to towns that send students to regional school districts.

Has the state always had the ECS formula?

Historically, Connecticut left cities and towns to rely chiefly on their local property taxpayers to fund K-12 education. And while the state developed some of the richest communities, and some of the poorest, in the nation, its approach to school funding remained unchanged.

But the Connecticut Supreme Court, in its 1977 landmark ruling in Horton v. Meskill, found that dysfunctional funding system violated the right to an education guaranteed in the state Constitution. Justices also concluded, however, that creating a more equitable approach was the legislature’s job.

Anticipating this ruling, the legislature had acted in 1975 to create the first weighted state grant system, the Guaranteed Tax Base formula. It was modified into the Education Cost Sharing system in 1988, as legislators merged that program with an ongoing effort to boost teachers’ salaries statewide.

Neither the GTB nor ECS legislation guarantee that all districts would enjoy equal funding — through a combination of local property tax dollars and increasing state grants. And Connecticut never has achieved such parity.

What factors have impacted the ECS formula?

Connecticut’s pension debt often has gotten in the way of equal education funding.

Governors and legislatures dating back to the late 1930s failed to save adequately for these benefits, leaving the state billions in debt. By the 1990s, mandatory pension contributions began surging significantly, gobbling up resources that could have gone for education and other programs.

That wouldn’t stabilize until 2017, when officials began refinancing that pension debt, stretching out payment plans and pushing some debt onto future generations of taxpayers.

Lawmakers took two more key steps that same year: crafting new budget caps to increase surpluses, which would be used to pay down pension debt even faster; and ordering a multi-year plan to beef up the ECS.

But pensions got a much bigger slice of the budget pie.

Since 2017, surpluses have averaged more than $1.8 billion per year. The ECS program is up about $450 million from eight years ago, and critics say the growth is far too modest to compensate for decades of stagnant funding.

Has the ECS formula kept up with inflation?

No.

The School and State Finance Project, a Connecticut-based education policy group, estimates the ECS system would distribute an extra $99 million this fiscal year were the foundation level alone adjusted to reflect inflation.

The Connecticut Conference of Municipalities launched an ad campaign in March attacking Gov. Ned Lamont — a big defender of existing savings programs. CCM estimates ECS grants, adjusted for inflation, have declined by more than $400 million since Lamont took office in 2019.

“Local leaders are being asked to do more with less, and the state’s leadership needs to be honest about the challenges our communities face,” CCM Executive Director and CEO Joe DeLong said. “It’s time for real solutions that provide stable, predictable and sufficient funding for our cities and towns, not just political talking points.”

Lamont countered that he’s tried to grow both education and general government aid to municipalities while still whittling down tens of billions of dollars in pension debt that he inherited.

“My budgets prioritized significant municipal aid investments because that funding is about more than ensuring our unique towns and cities are incredible places to live, but because that funding supports our children’s education and gives them the best opportunity at the starting line in life,” Lamont said in March.

What is ‘hold harmless’ and how does it impact ECS?

And as state officials try to balance municipal aid and pension obligations, a third issue also clouds the future of the ECS program.

Will Connecticut have to begin cutting education grants for some communities to increase them for others?

For decades, legislators and governors largely have resisted this option, even if the ECS formula called for a district to take a cut because of great wealth, declining student enrollment or a mix of factors.

This “hold harmless” approach — ensuring no district received less state funds one year than the prior year — was tested this past spring.

Lamont recommended that legislators stick to the formula they had adopted, boosting the program by more than $80 million in 2025-26 — but allowing more than 80 communities to receive less funds and collectively lose slightly less than $10 million.

But state Sen. Cathy Osten, D-Sprague, co-chairwoman of the Appropriations Committee, asked lawmakers to keep “hold harmless” alive for now, arguing the ECS formula is flawed and would otherwise punish some many poor, rural towns in her district in New London County.

Many rural poor communities marked by high unemployment, public assistance caseloads and local property tax rates have declining student populations. But, Osten noted, most are midsized to large geographically. That means even if their schools lose some students, they can’t easily cut costs by merging classes or closing schools.

 “That’s saying those communities don’t count,” Osten said.

Legislators ultimately opted to spare those 80-plus districts from ECS cuts for another two fiscal years, but are expected to resume the “hold harmless” debate soon.