Parents United The Funding of our Public Schools

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 tax 3. The 2001 General Education Buy Down

Per Pupil Formula Analysis prior to 2005 session YearFormula Allowance General Increase Actual “New Dollars” Actual % Change $3, % $3,150$ % $3,205$ % $3,505$ % $3,581$ % $3,530$(51)$(49)-1.37% $3,740$210$ % $3,964$224$952.54% $4,068$ % $4,601$533$ % $4, % $4, % Total$1551$ %/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 on a $250,000 Home

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 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

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.

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 8 th 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 Increases Expectations Increase Costs Increase Income tax reductions Property tax reductions Business 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 session YearFormula Allowance General Increase Actual “New Dollars” Actual % Change $3, % $3,150$ % $3,205$ % $3,505$ % $3,581$ % $3,530$(51)$(49)-1.37% $3,740$210$ % $3,964$224$952.54% $4,068$ % $4,601$533$ % $4, % $4, % $4,785$ % $4,976$ % Total$1926$ %/annually

So why should any of this matter to us?

Minnesota Future Labor Force

The Boom Generation Turning 65 in 2011 More 65+ Than School Age by 2020

Minnesota’s Populations Of Color Are Much Younger

Change In Minnesota School Enrollments to By Language Spoken At Home

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 Wyoming Delaware New York Louisiana Maine Utah New Mexico North Dakota Mississippi West Virginia Minnesota16.5

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 Wyoming West Virginia New Mexico North Dakota New York Mississippi Montana Louisiana Nebraska South Carolina Utah Oregon Delaware Vermont Maine Ohio Alabama California Kentucky Iowa Arkansas Washington Minnesota21.4