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Latest School Funding Figures Reveal Same Dismal Trend

February 10, 2010 By Jeff Van Wychen, Fellow and Director of Tax Policy & Analysis

You can tell a lot about a state's commitment to children and the future by its investment in education. Sadly, Minnesota's commitment has not been very strong as of late. Real per pupil school revenue in Minnesota continues to decline.  This trend means less investment in the state's future workforce and less chance for a prosperous Minnesota in coming years and decades. 

From the beginning of the full state takeover of general education funding (FY 2003) to the end of the current biennium (FY 2011), statewide real per pupil school operating revenue is projected to fall by 4.4 percent, while real per pupil state operating aid is projected to decline by 14.4 percent.

Over the last two years, Minnesota 2020 has regularly updated school revenue, state aid, property tax levy projections based on the most current data from the Minnesota Department of Education (MDE).  The information summarized below is based on the November 2009 state forecast as compiled by the MDE.  This analysis focuses on school operating revenue, which comprises the vast majority of all school district revenue.  All amounts presented are in constant FY 2011 dollars.*

The graph below shows the change in statewide school operating revenue, property tax levy, and state aid since FY 2003.  From FY 2003 to FY 2011, state aid is projected to fall by $1,357 per pupil, while property taxes are projected to increase by $910 per pupil.  Because the state aid reduction is significantly greater than the levy increase, total statewide school operating revenue is projected to fall by $447 per pupil.

A similar trend is observed in most Minnesota school districts.  Click here [PDF] for a printout that compares school operating revenue, property tax levy, and state aid for all Minnesota school districts for FY 2003 (actual) and FY 2011 (projected).  The graphs below present information for the three largest greater Minnesota and the three largest metro school districts.

The overall change in per pupil operating revenue, levy, and aid in the Elk River School district from FY 2003 to FY 2011 is nearly identical to the statewide average.  The percentage reduction in real per pupil school revenue (4.6 percent) is also very close to the statewide average.
 

The operating levy increase for Duluth schools from FY 2003 to projected FY 2011 is $885 per pupil, only modestly below the statewide average.  However, the state aid loss is $1,705 per pupil, significantly greater than the statewide average.  Consequently, the total per pupil operating revenue loss in Duluth is $821 (7.7 percent) per pupil-nearly double the statewide revenue loss.

The Rochester school district is the largest school district in greater Minnesota.  The per pupil aid loss in Rochester ($1,663) is somewhat greater than the statewide average and the per pupil levy increase ($322) is much less.  As a consequence, Rochester's per pupil operating revenue loss ($1,341 or 12.9 percent) is much greater than the statewide average.

The Saint Paul school district has had a much greater per pupil aid loss ($1,830) than most other school districts, but only a modestly greater property tax levy increase ($1,074).  As a result, the total per pupil revenue loss ($756 or 6.0 percent) is significantly greater than the statewide average.

From FY 2003 to FY 2011, state aid to the Minneapolis school districts has been slashed by $2,142 per pupil-more than in any of the other "big six" school districts examined in this article.  However, in 2008 Minneapolis voters passed in operating referendum levy that replaced much of the state aid cut.  As a result, FY 2010 and 2011 operating revenue for the Minneapolis school district today is projected to be nearly identical to what it was in FY 2003.  The referendum passed by the voters of Minneapolis did not provide a net increase in real school revenue, but it did help to backfill state aid cuts.

 

With nearly 39,000 students (adjusted average daily membership), the Anoka-Hennepin school district is the largest in the state.  It is also one of the few school districts that have seen a modest net revenue increase.  A $1,381 per pupil levy increase was sufficient to offset a $1,091 per pupil cut in state aid, thereby producing a $291 (3.0 percent) per pupil net revenue increase.

In the vast majority of school districts, most of the property tax increases since FY 2003 have not been providing a net increase in school revenue, but have been replacing state aid cuts made necessary because of growing state budget deficits and falling state revenue.  This is the result of a "no new tax" mentality which is happy to compel local governments to increase property taxes so that state leaders can say that they did not increase state taxes.  The citizens of Minnesota are growing tired of the "no new tax" shell game.

Another thing that Minnesotans are growing tired of is disinvestment in education.  Despite rising property taxes, real per pupil school revenue has steadily fallen during the "no new tax" era.  The trends outlined above are reinforced by data from the U.S. Census Bureau, which shows that Minnesota has dropped below the national average in public school current spending per pupil.

To compound matters, the financial plight of public education in Minnesota is not restricted to outright state aid cuts.  Large state aid shifts and aid payment delays are also detrimental to school finances.  Like state aid cuts, these shifts and delays are the product of state leaders who would prefer to address the state's revenue problems through accounting gimmicks than through pragmatic long-term solutions.

As demonstrated in a recent Minnesota 2020 report, Minnesota's performance relative to other states has begun to slide of some key measures of educational quality.  This trend-along with the trend of rising school property taxes-will continue as long as state leaders continue to address the state's budget problems by cutting funding for Minnesota schools.

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