Capital Outlay: Capital outlay refers to expenditures for the acquisition of, or additions to, major fixed assets such as land or buildings. Capital outlay also includes the repayment of debt related to such expenditures. Capital outlay is included in the state’s education funding formula, the Basic Education Program (BEP), as a non-classroom component.2
Categorical Funds/Aid: States distribute funds based on student characteristics or program needs. Funds may be allocated using grants or reimbursements. For example, a state may provide a funding supplement for a small or isolated school district, based on that designation alone.3
Census-Based Funding: The state allocates funds to each district based on an assumed level of enrollment, regardless of the district’s actual demographics. This type of funding can be used in foundation formula model funding and resource allocation model funding.3
Cost Differential Factor (CDF): The cost differential factor (CDF) is used to adjust salary calculations in the state’s education funding formula, the Basic Education Program (BEP), for school districts in counties where wages in non-governmental sectors are above comparable statewide figures. The CDF was developed based on the idea that school districts in counties with generally higher wages may need to offer higher salaries to attract and retain teachers. Counties with above-average wages receive an increase in funding for salaries and retirement contributions, and counties with average or below-average wages do not receive an increase.
BEP 2.0, passed in 2007, eliminated CDF from the funding formula. Because BEP 2.0 was only partially phased in, however, counties qualifying for a CDF adjustment received 50 percent of the calculated CDF. The 2016 changes to the BEP decreased CDF adjustments to 25 percent, and the appropriations act further reduced CDF to 20 percent in fiscal years 2017-18 and 2018-19, and 16 percent in fiscal year 2019-20. In fiscal year 2019-20, 15 districts were receiving CDF adjustments. The CDF is still slated to be eliminated from the BEP formula contingent on future increases to the Instructional Salaries and Wages category.2