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Parents United
The Funding of our Public Schools
www.parentsunited.org
Minnesota State Constitution
Section 1.”UNIFORM SYSTEM OF PUBLIC SCHOOLS. The stability of a republican form of government depending mainly upon the intelligence of the people, it is the duty of the legislature to establish a general and uniform system of public schools. The legislature shall make such provisions by taxation or otherwise as will secure a thorough and efficient system of public schools throughout the state.”
How Public Schools are Funded
The legislature taxes, funds and regulates;
School boards dispense funds
The Legislative Process
The Minnesota State Legislature works on a biennium basis.
One year for policy and the next for funding.
In its funding session, the Legislature sets the per pupil formula for the next two years.
The Funding Process
Per pupil formula x AMCPU (adjusted marginal cost pupil units)
District Operating fund (General Fund)
How Did We Get Where We Are?
1. A per pupil formula that has averaged 1.14% increase annually
2. State policies reforming property tax3. The 2001 General Education Buy
Down
Per Pupil Formula Analysis prior to 2005 sessionYear Formula
AllowanceGeneral Increase
Actual “New Dollars”
Actual % Change
1992-93 $3,050 -- ---- 0.00%
1994-95 $3,150 $100 ----- 0.00%
1995-96 $3,205 $55 $55 1.75%
1996-97 $3,505 $300 ---- 0.00%
1997-98 $3,581 $76 $76 2.17%
1998-99 $3,530 $(51) $(49) -1.37%
1999-00 $3,740 $210 $150 4.25%
2000-01 $3,964 $224 $95 2.54%
2001-02 $4,068 $104 $104 2.62%
2002-03 $4,601 $533 $118 2.90%
2003-04 $4,601 ---- ----- 0.00%
2004-05 $4,601 ---- ------ 0.00%
Total $1551 $559 1.14%/annually
Flat per pupil formula
The true per pupil formula grew an average of 1.14% annually
As in all labor intensive sectors i.e. health care and education, expenses grew an average of 5% annually
How Did We Get Where We Are?
1. A per pupil formula that has averaged 1.14% increase annually
2. State policies reforming property tax
3. The 2001 General Education Buy Down
State policies to reform property taxes
Class rates for taxing businesses were reduced to more closely resemble residential property tax rates
Agricultural and recreational land removed from the equation for school taxes
General Education Fund Buy Down
Annual School Taxes 1997-2002 on a $250,000 Home
$2,643$2,437
$2,069$1,760 $1,772
$793
0
500
1000
1500
2000
2500
3000
1997 1998 1999 2000 2001 2002
How Did We Get Where We Are?
1. A per pupil formula that has averaged 1.14% increase annually
2. State policies reforming property tax3. The 2001 General Education Fund
Buy Down
General Fund Buy Down
In 2001, the state accepted the liability of funding 85% of
public schools cost Passed half of the legislation—the
liability was accepted, without a revenue stream to support it.
Destabilized the funding source for schools and now makes them reliant on the state’s economy
Change in percent of school revenue from the state
86.30%
72.70%65.80%
60%
1997 1999 2001 2003
Price of Government
The Price of
Government is the State of Minnesota’s official measure and is factored as total revenue as a percentage of personal income.
17%
16%
15%
1992 2002 2006
What was happening with the economy?
Between 1995 and 2001 the state of Minnesota and the federal government experienced the largest surpluses ever recorded
Minnesota rose to rank 8th in per capita income of the fifty states
Residents received tax rebate checks in multiple years
Property tax reductions were enacted over multiple years
Business tax rates were reformed
Requirements for public schools grew while funding did not
• Testing• Standards• Special education mandates• Transportation• English Language Learning• Days added to the school year• Health and safety mandates• Physical Education• HIV/AIDS Sex Education• Drug/Alcohol Abuse Education• Bus Safety• Title 1 programs• 100% Rule
The 90’s
Growth IncreasesExpectations IncreaseCosts Increase
Income tax reductionsProperty tax reductionsBusiness tax rate reductions
2005 Legislative Session Largest increase in K-12 in 14 years Schools needed 5%/5%--received 4%/4% Continued use of cross subsidy dollars Early childhood “increases” to 2003
figures Increased local prop tax by $139 million Used $95 million in tax shifts Used Cigarette taxes
Per Pupil Formula Analysis after 2005 sessionYear Formula
AllowanceGeneral Increase
Actual “New Dollars”
Actual % Change
1992-93 $3,050 -- ---- 0.00%
1994-95 $3,150 $100 ----- 0.00%
1995-96 $3,205 $55 $55 1.75%
1996-97 $3,505 $300 ---- 0.00%
1997-98 $3,581 $76 $76 2.17%
1998-99 $3,530 $(51) $(49) -1.37%
1999-00 $3,740 $210 $150 4.25%
2000-01 $3,964 $224 $95 2.54%
2001-02 $4,068 $104 $104 2.62%
2002-03 $4,601 $533 $118 2.90%
2003-04 $4,601 ---- ----- 0.00%
2004-05 $4,601 ---- ------ 0.00%
2005-06 $4,785 $184 $184 4.00%
2006-07 $4,976 $191 $191 4.00%
Total $1926 $624 1.52%/annually
So why should any of this matter to us?
Minnesota Future Labor Force
0
150000
300000
450000
600000
1970-80 1980-90 1990-00 2000-10 2010-20 2020-30
Net Labor Force Growth
The Boom Generation Turning 65 in 2011 More 65+ Than School Age by 2020
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1950 1960 1970 1980 1990 2000 2010 2020 2030
18-24
65+
5-17
Minnesota’s Populations Of Color Are Much Younger
25.4
27.8
28.2
25.4
38.3
0 10 20 30 40 50
Black
Am Indian
Asian
Hispanic
White Not Hispanic
Median Age in Years
Change In Minnesota School Enrollments 1999-00 to 2004-05 By Language Spoken At Home
-43,974
25,460
-18,514
-50000
-40000
-30000
-20000
-10000
0
10000
20000
30000
English Speaking
Total Non English
Total K-12 Students
Special Education In the mid 1970’s, the federal government
mandated special education services. They were to have paid 40% of the cost of those services. They have never paid more than 18%.
In 2005, the state auditor’s report on public school costs showed that the greatest increases in school budgets were for special education.
What do we need to do?
Define the cost of educating a child in the state of Minnesota.
Define the cost of educating that child if they have special needs, need English language learning support or qualify for free and reduced lunch
Study different funding formula models that may be used.
Funding Study 2003 Funding Study commissioned Significant findings made public in 2004
• Those schools with higher concentrations of children who are English language learners, qualify for free and reduced lunch and/or have special needs have higher costs.
• Student access to quality local public schools should not be dependent on the property wealth of their district.
Today Education groups are having the study completed
And…be part of the conversation How should schools be funded?
Taxes? Casinos? Sin taxes? Should schools themselves be revenue generators?
Vouchers/Tax Credits Who should fund schools?
What should the state’s responsibility be? What should the local taxpayer’s responsibility be? Should philanthropy be used and to what extent?
“What the best and wisest parent wants for his own
child, that must the community want for all
children” ---John Dewey
Addendum slides
State and Local Taxes plus Government fees and Charges
Rank State % of personal income
1 Alaska 26.42 Wyoming 20.03 Delaware 17.94 New York 17.55 Louisiana 17.56 Maine 17.37 Utah 17.38 New Mexico 17.19 North Dakota 17.010 Mississippi 16.811 West Virginia 16.612 Minnesota 16.5
Minnesota Taxes in Context
“Minnesota is a big government state if you measure it by taxes alone. But it collects less revenue than other states from user charges (such as tolls, tuition and permit fees) and from federal transfers*. Add all sources of revenue together, adjust them for the states’ population and per capita income and Minnesota is about average among the 50 states.”
*federal transfers are funding provided by the federal government to the state for projects such as Medicaid and transportation
Source: Minnesota Budget Project Star Tribune
State and Local Taxes plus government fees and federal transfers
Rank State % of personal income 1 Alaska 34.1 2 Wyoming 28.4 3 West Virginia 26.6 4 New Mexico 25.4 5 North Dakota 25.4 6 New York 25.1 7 Mississippi 25.0 8 Montana 24.5 9 Louisiana 24.4 10 Nebraska 24.3 11 South Carolina 24.2 12 Utah 24.1 13 Oregon 23.3 14 Delaware 23.0 15 Vermont 22.4 16 Maine 22.5 17 Ohio 22.1 18 Alabama 22.0 19 California 22.0 20 Kentucky 21.9 21 Iowa 21.9 22 Arkansas 21.7
23 Washington 21.5 24 Minnesota 21.4
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