Some school corporations have lots of valuable property to tax, others have very little. Left to themselves, poorer corporations would spend less, richer corporations would spend more. The aid formula delivers more aid to poorer corporations, and less to richer corporations, in an effort to equalize the resources available to school corporations across the states. Likewise, some school corporations face higher education costs, others find education less expensive. The aid formula delivers more aid to corporations with higher education costs.
State aid is divided among local school corporations by formula.
It would be too hard to set each corporation's aid level independently through political negotiations among legislators. Instead, the characteristics of school corporations are inserted into a formula, which calculates the aid received by each school corporation each year. The school aid formula is very complex. The formula must be approved by a majority of each house of the General Assembly. Creating majority coalitions for a particular formula sometimes requires adding characteristics and calculations to the formula, to attract the support of particular groups of legislators.