The method used to provide state aid to AEAs is referred to as a “flow through” concept. That is, AEA funding is controlled by legislatively determined amounts of property tax dollars and state funds that literally “flow through” local school district budgets to the AEA. The rationale behind the concept is based on the fact that the AEAs have no direct taxing authority.
AEA funding is included in a school district budget. However, the school district does not receive AEA-related state aid funding. Rather, funds generated by a school district through the operation of the state school aid formula are set aside for the AEA and then subtracted by the state from what a district would receive from the state and passed through to an AEA.