Understanding Louisiana's MFP Formula 2018-19

 
An Overview of the
Minimum Foundation Program (MFP) Formula
2018-19
 
Louisiana Believes
 
1
 
Louisiana Constitution Article VIII, Section 13 provides that
the State Board of Elementary and Secondary Education
(SBESE) shall annually develop and adopt a formula which
shall be used to:
Determine the cost of a minimum foundation program of
education in the State.
Equitably distribute State funds to local school systems
and schools.
 
MFP Purpose
 
Louisiana Believes
 
2
 
The formula for the upcoming fiscal year must be submitted
by SBESE to the Legislature no later than March 15th.
The Legislature considers the formula submitted by SBESE
during the Legislative Session.
If it meets with their approval, the formula is adopted.
If the Legislature disagrees with the formula, the formula
is rejected and is returned to SBESE.
SBESE then has the option to revise and resubmit or take no
action.
 
Adoption and Implementation Process
 
Louisiana Believes
 
3
 
Louisiana law provides that if a new formula is not adopted,
then the existing formula remains in effect.
 
The formula in effect for FY 2018-19 is SCR 48 adopted in the
2018 Regular Session of the Legislature.
 
Adoption and Implementation Process
 
4
 
Louisiana Believes
 
Structure of Formula
 
5
 
Louisiana Believes
 
 
The total MFP allocation in 2018-19 totals over $3.7 Billion and
supports over 177 school districts and schools.
The formula is designed with separate calculations to provide
funding for different educational needs and costs.
The current formula has four sections or “levels.”
 
 
Level 1 Funding
 
6
 
Louisiana Believes
 
 
Level 1 calculations utilize student counts and special student
characteristics as the basis for determining the cost of
education in every community across the state.
The upcoming fiscal year is funded based on the student count
taken on the previous February 1.
 Students must qualify to be counted, both for the base and the
weighted counts, as applicable, according to the Student
Membership Definition set forth in SBESE policy.
Level 1 allocates approximately $2.4 billion, or 67% of the total
MFP allocation.
The first step in the calculation is to determine the Weighted
Student Membership Count:
 
Level 1Funding
 
7
 
Louisiana Believes
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Student Counts
 
8
 
Louisiana Believes
 
Level 1 Funding
 
9
 
Louisiana Believes
 
The second step in the calculation is to determine the Total
MFP Educational Cost:
 
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The State and Local Base Cost Per Pupil Amount is the amount
utilized as a starting point for the calculation of the cost of education
in the school districts and schools across the state.
This amount is used exclusively in the Level 1 cost calculation
and is 
not 
the final per pupil allocation that each district
receives.
 From 2014-15 to 2018-19, the Base Cost Per Pupil Amount remained
at $3,961.
At the same time, the Legislature appropriated additional
funding for K -12 education outside of the formula.
From 2009-10 to 2013-14, the Base Cost Per Pupil remained the
same.
From 2000-01 to 2008-09, the MFP formula included a 2.75%
increase to the Base Cost Per Pupil Amount.
 
Base Cost Per Pupil Amount
 
Louisiana Believes
 
10
 
The next step in the calculation is to determine the
proportion of the Total MFP Educational Cost that will be
shared between the State and the city and parish school
systems.
The proportion is based on the ability of the school systems to
support education in their communities through local sales
and property tax revenues.
This calculation is often referred to as the “wealth
measurement.”
This calculation utilizes data on local ad valorem, sales,
and other revenue amounts.
 
 
 
Sharing of Level 1 Total MFP
Educational Cost
 
Louisiana Believes
 
11
 
Sharing of Level 1 Total MFP
Educational Cost
 
Louisiana Believes
 
12
 
In order to determine the Local Cost Allocation, the formula
measures the potential of each city and parish school system to
generate local revenue rather than the actual amount collected.
This methodology accounts for differences in the ability of
city and parish school systems to raise local revenue.
Ad valorem millages and sales tax rates are utilized in the
calculation at a level appropriate to yield the 65%/35% split.
To determine each individual district’s potential to generate
revenue, the calculation multiplies statewide computed tax
millages and rates against actual ad valorem tax assessments and
sales tax bases.
The result of this calculation is the Local Cost Allocation.
 
Sharing of Level 1 Total MFP
Educational Cost
 
Louisiana Believes
 
13
 
Each individual district will have a unique allocation based on
its unique situation.
The percent of the cost funded by the State may range
from a high of 89% to a low of 25%.
Each year, as school systems are more or less able to
support education costs through increases or decreases
in local revenues, the formula adjusts the State and
Local allocations upward or downward as applicable.
Overall, the formula ensures an average State contribution of
65% and an average Local contribution of 35% creating
statewide equity in the formula.
 
 
 
Sharing of Level 1 Total MFP
Educational Cost
 
Louisiana Believes
 
14
 
State and Local Contributions
 
15
 
Louisiana Believes
 
Once the Local Cost Allocation is determined, the next step is to
calculate the State Cost Allocation.
 
 
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In the early years of this formula, some city and parish school
systems did not have local revenues sufficient to meet the
minimum local allocation required.
Local school systems identified two obstacles to increasing local
revenues at the time:
Taxpayers are not regularly willing to tax themselves more
heavily.
Under the new formula, if a city or parish school system
became more able to support education costs (became
“wealthier”), then Level 1 allocations were decreased.
As a result, a provision was added to the formula that provided
an incentive or reward to school systems taxing themselves
above the 
minimum level of financial support required.
 
 
 
Level 2 Funding
 
Louisiana Believes
 
16
 
 
To be eligible for the Level 2 Reward, a city or parish school
system must actually generate local revenue above the local
allocation required in Level 1.
Any amount above this minimum, is then eligible to be
considered for the reward calculation.
The reward amount is approximately one-third of the amount of
local revenues above the contribution required in Level 1.
For some years now, all of the city and parish school systems
have met the minimum local revenue required.
The majority of the city and parish school systems currently
receive the reward with the exception of a few school systems
no longer eligible due to the recent extraordinary growth in their
local revenues.
Level 2 allocates approximately $489 million, or 13% of the total
allocation.
 
 
Level 2 
Funding
 
Louisiana Believes
 
17
 
 
Level 3 contains allocations added to the formula over the
years due to requests from the Legislature to fund specific
items.
These allocations are determined on a per student basis.
This funding is in addition to the funding provided in Level 1
and Level 2.
Level 3 allocations total over $628 million, or 17% of the total
allocation.
The categories of funding include:
Continuation of Pay Raises
Teacher pay raises originally provided by the Legislature  in
2001-02, 2006-07, 2007-08, and 2008-09.
Support worker pay raises originally provided by the
Legislature in 2002-03, 2006-07, 2007-08.
 
Level 3 
Funding
 
Louisiana Believes
 
18
 
Hold Harmless
A total of $76 million is allocated through this
mechanism.
$38 million is a frozen amount that is provided to 11
school systems to continue funding for pay raises
and insurance allocated since the early 1990s.
$38 million is provided to the non-Hold Harmless
districts on a per pupil basis.
Support for Increasing Mandated Costs of Health Insurance,
Retirement, and Fuel allocation provides $100 per student
to help defray the costs of these expenses.
 
Level 3 
Funding
 
Louisiana Believes
 
19
 
Level 4 provides funding for specific programs and schools, each with
its own unique allocation methodology.
Level 4 allocates over $107 million, or 3% of the total allocation.
$45
 
million for programs and $62 million for other public
schools.
Allocations include:
Foreign Language Associates
The Salary Allocation provides $21,000 per teacher to a
school system  or school employing this individual with a
statewide maximum of 300 teachers.
The Stipend Allocation provides a $6,000 installation
stipend for first year foreign language associate teachers,
and a $4,000 retention stipend for second and third year
teachers.
 
Level 4 Funding
 
20
 
Louisiana Believes
 
Career Development Fund (CDF) Allocation
Provides an additional 6% in MFP funding (about
$240) for specific courses providing career training
for students.
Supplemental Course (SCA) Allocation
Provides $59 per pupil for each student enrolled in
grades 7 through 12 to support the cost of secondary
course choices above and beyond the traditional
classroom.
High Cost Services (HCS) Allocation
Provides funding for students, ages 3 – 21, with a
current IEP, who is currently receiving services whose
cost is deemed to be greater than three times the
average per pupil expenditure
 
 
Level 4 Funding
 
21
 
Louisiana Believes
 
Allocations within the formula are provided to other public
schools:
LSU and Southern Lab Schools
Legacy Type 2 Charter Schools
Office of Juvenile Justice (OJJ) Schools
New Orleans Center for Creative Arts (NOCCA)
Louisiana School for the Math, Science, and the Arts
(LSMSA)
Thrive Academy of Baton Rouge (THRIVE)
 
Level 4 Funding
 
22
 
Louisiana Believes
 
The formula provides funding for Mid-year Adjustments for
student gains and losses during the year.
 
Two mid-year adjustments are provided:
October 1 Count
February 1 count compared to October 1 count
Increase/decrease in students is multiplied times
the
 
State Cost Allocation per pupil amount
February 1 Count
October 1 count compared to February 1 count
Increase/decrease in students is multiplied times
one-half of the State Cost Allocation per pupil
amount
 
Mid-Year Student Count Adjustments
 
Louisiana Believes
 
23
 
The MFP Resolution requires that State MFP funds shall only be expended
for educational purposes
These expenditures are related to the operational and instructional
activities of city, parish, or other public school systems or schools
including:
Instruction, pupil support, instructional staff programs, school
administration, general administration, business services,
operations/maintenance of plant services, student transportation,
food services, enterprise operations, community services, facility
acquisition and construction services, and debt services
Commonly a large portion of expenditures paid for with MFP funds
include teacher salaries and benefits including retirement since these
expenses make up approximately 85% of all educational related costs.
 
Use of Funds
 
24
 
Louisiana Believes
 
 
MFP is a block grant from the State to local school systems
and schools.
The block grant philosophy provides flexibility to school
systems and schools in budgeting funds to spend as they see
fit as long as program requirements set forth by SBESE are
met.
The MFP funds should be blended with other funds in order
to support the cost of education.
In order to provide for appropriate accountability of funds
spent on K – 12 education in Louisiana, the MFP Resolution
requires an annual measurement and report on the manner
in which general fund dollars, state and local funds combined,
are spent.
 
 
Expenditure Requirement
 
Louisiana Believes
 
25
 
The 70% Expenditure Requirement requires public school systems
and schools that receive MFP funds to spend 70% of general fund
(state and local) dollars in the areas of instruction and school
administration at the school building level.
In the most recent measurement, 130 of a total 177 school
districts and schools met the requirement.
The 47 entities that did not meet this requirement are required to
submit a plan to the LDOE which details their efforts over the
next year to make budget and spending adjustments.
In many cases, the reason entities do not meet this requirement
is due to special circumstances such as high transportation costs
associated with rural schools.
 
Expenditure Requirement
 
26
 
Louisiana Believes
 
MFP Appropriation History
 
27
 
Louisiana Believes
 
 
August to December – Research and presentations
January to February – SBESE considers possible revisions to the
MFP formula for the upcoming fiscal year
March – SBESE makes final decision on structure of the MFP
formula and submits the proposed formula along with an
estimated cost to the Legislature for consideration
April to June – Legislature considers the formula
 
MFP Formula Budgeting Cycle
 
28
 
Louisiana Believes
 
Total K – 12 Education Funding
 
29
 
Louisiana Believes
 
For more information on the Minimum Foundation
Program (MFP), reference the following link:
 
http://www.louisianabelieves.com/resources/library/mi
nimum-foundation-program
 
Questions may be sent to 
LDOEMFPHelpdesk@la.gov
 
References
 
Louisiana Believes
 
30
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Louisiana's Minimum Foundation Program (MFP) Formula for 2018-19 aims to determine the cost of education, distribute state funds equitably, and support educational needs. The formula is developed annually by the State Board of Elementary and Secondary Education (SBESE) and has specific levels for funding allocations based on student counts and special characteristics. The adoption process involves submission to the Legislature and potential revisions. The total MFP allocation for 2018-19 exceeds $3.7 billion to support over 177 school districts and schools.


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  1. An Overview of the Minimum Foundation Program (MFP) Formula 2018-19 Louisiana Believes 1

  2. MFP Purpose Louisiana Constitution Article VIII, Section 13 provides that the State Board of Elementary and Secondary Education (SBESE) shall annually develop and adopt a formula which shall be used to: Determine the cost of a minimum foundation program of education in the State. Equitably distribute State funds to local school systems and schools. Louisiana Believes 2

  3. Adoption and Implementation Process The formula for the upcoming fiscal year must be submitted by SBESE to the Legislature no later than March 15th. The Legislature considers the formula submitted by SBESE during the Legislative Session. If it meets with their approval, the formula is adopted. If the Legislature disagrees with the formula, the formula is rejected and is returned to SBESE. SBESE then has the option to revise and resubmit or take no action. Louisiana Believes 3

  4. Adoption and Implementation Process Louisiana law provides that if a new formula is not adopted, then the existing formula remains in effect. The formula in effect for FY 2018-19 is SCR 48 adopted in the 2018 Regular Session of the Legislature. Louisiana Believes 4

  5. Structure of Formula The total MFP allocation in 2018-19 totals over $3.7 Billion and supports over 177 school districts and schools. The formula is designed with separate calculations to provide funding for different educational needs and costs. The current formula has four sections or levels. Louisiana Believes 5

  6. Level 1 Funding Level 1 calculations utilize student counts and special student characteristics as the basis for determining the cost of education in every community across the state. The upcoming fiscal year is funded based on the student count taken on the previous February 1. Students must qualify to be counted, both for the base and the weighted counts, as applicable, according to the Student Membership Definition set forth in SBESE policy. Level 1 allocates approximately $2.4 billion, or 67% of the total MFP allocation. Louisiana Believes 6

  7. Level 1Funding The first step in the calculation is to determine the Weighted Student Membership Count: Economically Disadvantaged Weight 22% Career & Technical Education Weight 6% Total Weighted Student Membership Count February 1 Student Membership Count Special Education Weight 150% Gifted and Talented Weight 60% Economy of Scale Weight up to 20% Louisiana Believes 7

  8. Student Counts February 1 Student Count 686,000 685,000 684,798 684,000 684,539 683,967 683,000 683,123 682,000 681,000 680,000 679,000 678,000 678,570 677,000 676,000 675,000 2014 2015 2016 2017 2018 Louisiana Believes 8

  9. Level 1 Funding The second step in the calculation is to determine the Total MFP Educational Cost: Total Weighted Student Membership Count Total MFP State and Local Base Cost Per Pupil Amount Educational Cost Louisiana Believes 9

  10. Base Cost Per Pupil Amount The State and Local Base Cost Per Pupil Amount is the amount utilized as a starting point for the calculation of the cost of education in the school districts and schools across the state. This amount is used exclusively in the Level 1 cost calculation and is not the final per pupil allocation that each district receives. From 2014-15 to 2018-19, the Base Cost Per Pupil Amount remained at $3,961. At the same time, the Legislature appropriated additional funding for K -12 education outside of the formula. From 2009-10 to 2013-14, the Base Cost Per Pupil remained the same. From 2000-01 to 2008-09, the MFP formula included a 2.75% increase to the Base Cost Per Pupil Amount. Louisiana Believes 10

  11. Sharing of Level 1 Total MFP Educational Cost The next step in the calculation is to determine the proportion of the Total MFP Educational Cost that will be shared between the State and the city and parish school systems. The proportion is based on the ability of the school systems to support education in their communities through local sales and property tax revenues. This calculation is often referred to as the wealth measurement. This calculation utilizes data on local ad valorem, sales, and other revenue amounts. Louisiana Believes 11

  12. Sharing of Level 1 Total MFP Educational Cost Sales Tax, Property Tax and Other Local Revenues $3,700,000,000 $3,600,000,000 $3,600,843,272 $3,500,000,000 $3,504,089,652 $3,459,117,876 $3,400,000,000 $3,300,000,000 $3,296,292,320 $3,200,000,000 $3,227,058,932 $3,100,000,000 $3,000,000,000 FY2012-13 FY14-15 Formula FY2013-14 FY15-16 Formula FY2014-15 FY16-17 Formula FY2015-16 FY17-18 Formula FY2016-17 FY18-19 Formula Louisiana Believes 12

  13. Sharing of Level 1 Total MFP Educational Cost In order to determine the Local Cost Allocation, the formula measures the potential of each city and parish school system to generate local revenue rather than the actual amount collected. This methodology accounts for differences in the ability of city and parish school systems to raise local revenue. Ad valorem millages and sales tax rates are utilized in the calculation at a level appropriate to yield the 65%/35% split. To determine each individual district s potential to generate revenue, the calculation multiplies statewide computed tax millages and rates against actual ad valorem tax assessments and sales tax bases. The result of this calculation is the Local Cost Allocation. Louisiana Believes 13

  14. Sharing of Level 1 Total MFP Educational Cost Each individual district will have a unique allocation based on its unique situation. The percent of the cost funded by the State may range from a high of 89% to a low of 25%. Each year, as school systems are more or less able to support education costs through increases or decreases in local revenues, the formula adjusts the State and Local allocations upward or downward as applicable. Overall, the formula ensures an average State contribution of 65% and an average Local contribution of 35% creating statewide equity in the formula. Louisiana Believes 14

  15. State and Local Contributions Once the Local Cost Allocation is determined, the next step is to calculate the State Cost Allocation. Total MFP State Cost Allocation Local Cost Allocation Educational Cost Louisiana Believes 15

  16. Level 2 Funding In the early years of this formula, some city and parish school systems did not have local revenues sufficient to meet the minimum local allocation required. Local school systems identified two obstacles to increasing local revenues at the time: Taxpayers are not regularly willing to tax themselves more heavily. Under the new formula, if a city or parish school system became more able to support education costs (became wealthier ), then Level 1 allocations were decreased. As a result, a provision was added to the formula that provided an incentive or reward to school systems taxing themselves above the minimum level of financial support required. Louisiana Believes 16

  17. Level 2 Funding To be eligible for the Level 2 Reward, a city or parish school system must actually generate local revenue above the local allocation required in Level 1. Any amount above this minimum, is then eligible to be considered for the reward calculation. The reward amount is approximately one-third of the amount of local revenues above the contribution required in Level 1. For some years now, all of the city and parish school systems have met the minimum local revenue required. The majority of the city and parish school systems currently receive the reward with the exception of a few school systems no longer eligible due to the recent extraordinary growth in their local revenues. Level 2 allocates approximately $489 million, or 13% of the total allocation. Louisiana Believes 17

  18. Level 3 Funding Level 3 contains allocations added to the formula over the years due to requests from the Legislature to fund specific items. These allocations are determined on a per student basis. This funding is in addition to the funding provided in Level 1 and Level 2. Level 3 allocations total over $628 million, or 17% of the total allocation. The categories of funding include: Continuation of Pay Raises Teacher pay raises originally provided by the Legislature in 2001-02, 2006-07, 2007-08, and 2008-09. Support worker pay raises originally provided by the Legislature in 2002-03, 2006-07, 2007-08. Louisiana Believes 18

  19. Level 3 Funding Hold Harmless A total of $76 million is allocated through this mechanism. $38 million is a frozen amount that is provided to 11 school systems to continue funding for pay raises and insurance allocated since the early 1990s. $38 million is provided to the non-Hold Harmless districts on a per pupil basis. Support for Increasing Mandated Costs of Health Insurance, Retirement, and Fuel allocation provides $100 per student to help defray the costs of these expenses. Louisiana Believes 19

  20. Level 4 Funding Level 4 provides funding for specific programs and schools, each with its own unique allocation methodology. Level 4 allocates over $107 million, or 3% of the total allocation. $45 million for programs and $62 million for other public schools. Allocations include: Foreign Language Associates The Salary Allocation provides $21,000 per teacher to a school system or school employing this individual with a statewide maximum of 300 teachers. The Stipend Allocation provides a $6,000 installation stipend for first year foreign language associate teachers, and a $4,000 retention stipend for second and third year teachers. Louisiana Believes 20

  21. Level 4 Funding Career Development Fund (CDF) Allocation Provides an additional 6% in MFP funding (about $240) for specific courses providing career training for students. Supplemental Course (SCA) Allocation Provides $59 per pupil for each student enrolled in grades 7 through 12 to support the cost of secondary course choices above and beyond the traditional classroom. High Cost Services (HCS) Allocation Provides funding for students, ages 3 21, with a current IEP, who is currently receiving services whose cost is deemed to be greater than three times the average per pupil expenditure Louisiana Believes 21

  22. Level 4 Funding Allocations within the formula are provided to other public schools: LSU and Southern Lab Schools Legacy Type 2 Charter Schools Office of Juvenile Justice (OJJ) Schools New Orleans Center for Creative Arts (NOCCA) Louisiana School for the Math, Science, and the Arts (LSMSA) Thrive Academy of Baton Rouge (THRIVE) Louisiana Believes 22

  23. Mid-Year Student Count Adjustments The formula provides funding for Mid-year Adjustments for student gains and losses during the year. Two mid-year adjustments are provided: October 1 Count February 1 count compared to October 1 count Increase/decrease in students is multiplied times the State Cost Allocation per pupil amount February 1 Count October 1 count compared to February 1 count Increase/decrease in students is multiplied times one-half of the State Cost Allocation per pupil amount Louisiana Believes 23

  24. Use of Funds The MFP Resolution requires that State MFP funds shall only be expended for educational purposes These expenditures are related to the operational and instructional activities of city, parish, or other public school systems or schools including: Instruction, pupil support, instructional staff programs, school administration, general administration, business services, operations/maintenance of plant services, student transportation, food services, enterprise operations, community services, facility acquisition and construction services, and debt services Commonly a large portion of expenditures paid for with MFP funds include teacher salaries and benefits including retirement since these expenses make up approximately 85% of all educational related costs. Louisiana Believes 24

  25. Expenditure Requirement MFP is a block grant from the State to local school systems and schools. The block grant philosophy provides flexibility to school systems and schools in budgeting funds to spend as they see fit as long as program requirements set forth by SBESE are met. The MFP funds should be blended with other funds in order to support the cost of education. In order to provide for appropriate accountability of funds spent on K 12 education in Louisiana, the MFP Resolution requires an annual measurement and report on the manner in which general fund dollars, state and local funds combined, are spent. Louisiana Believes 25

  26. Expenditure Requirement The 70% Expenditure Requirement requires public school systems and schools that receive MFP funds to spend 70% of general fund (state and local) dollars in the areas of instruction and school administration at the school building level. In the most recent measurement, 130 of a total 177 school districts and schools met the requirement. The 47 entities that did not meet this requirement are required to submit a plan to the LDOE which details their efforts over the next year to make budget and spending adjustments. In many cases, the reason entities do not meet this requirement is due to special circumstances such as high transportation costs associated with rural schools. Louisiana Believes 26

  27. MFP Appropriation History Total Actual Appropriation $4,000,000,000 $3,707,203,252 $3,684,986,335 $3,629,824,930 $3,678,498,272 $3,565,826,163 $3,500,000,000 1.52% Increase 1.79% Increase 0.18% Decrease 0.78% Increase $3,000,000,000 $2,500,000,000 $3,436,831,987 $3,400,239,001 $3,333,357,104 $2,000,000,000 $3,396,745,776 $3,302,972,099 $1,500,000,000 $1,000,000,000 $500,000,000 $296,467,826 $284,747,334 $281,752,496 $270,371,265 $262,854,064 $0 2013-14 2014-15 2015-16 2016-17 2017-18 Statutory Dedication State General Fund Louisiana Believes 27

  28. MFP Formula Budgeting Cycle August to December Research and presentations January to February SBESE considers possible revisions to the MFP formula for the upcoming fiscal year March SBESE makes final decision on structure of the MFP formula and submits the proposed formula along with an estimated cost to the Legislature for consideration April to June Legislature considers the formula Louisiana Believes 28

  29. Total K 12 Education Funding Historical Summary of Total Revenue $4,500,000,000 $3,774,533,478 $4,000,000,000 $3,795,849,408 $3,754,610,243 $3,696,162,798 $3,561,061,485 $3,912,972,636 $3,878,498,318 $3,724,974,038 $3,500,000,000 $3,614,506,408 $3,501,361,548 $3,000,000,000 $2,500,000,000 $2,000,000,000 $1,500,000,000 $1,000,000,000 $1,110,602,410 $1,108,973,205 $1,108,509,236 $1,098,505,344 $1,026,208,642 $500,000,000 2012-13 2013-14 2014-15 2015-16 2016-17 State Revenue Local Revenue Federal Revenue Louisiana Believes 29

  30. References For more information on the Minimum Foundation Program (MFP), reference the following link: http://www.louisianabelieves.com/resources/library/mi nimum-foundation-program Questions may be sent to LDOEMFPHelpdesk@la.gov Louisiana Believes 30

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