Foundation programs are a means of providing equalization grants to school systems. A foundation program
establishes some minimum level of state guaranteed per pupil or per teacher funding that localities must meet
with a combination of local and state funding to pay for a basic education program. By law, no district can fall
below this foundation level. Using mainly property and/or sales taxes, localities contribute to the state
guarantee from a uniform tax rate or the funding that would result from it. Nonetheless, even with similar tax
efforts, poor localities raise less funding and more affluent communities raise more because of variations in the
local property tax base. The state makes up that difference up to the state foundation level guarantee.
Assume that the minimum foundation level is set at $10,000 per pupil. The local effort required will be
lower in low-capacity school districts and higher in high-capacity districts. Once the locality meets the
foundation level, districts can choose to supplement funding, called leeway funds, to achieve a higher level of per pupil spending.