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Be Wary of Anti-Education Sound Bytes

March 30, 2010 By Jeff Van Wychen, Fellow and Director of Tax Policy & Analysis

While professing concern for the state's K-12 education system, a conservative legislator recently claimed that K-12 education funding will "increase by 328 percent" from FY 1993 (school year 1992-93) to FY 2013 (school year 2012-13). This assertion is flawed on many levels--not least of which is the fact that it is flat-out wrong.

It is not clear from the context of the claim whether the alleged 328 percent growth is based on total school revenue or just state aid, but what is quite clear is that neither total revenues nor state aid is projected to come anywhere near 328 percent growth during this 20 year period.

A meaningful analysis of growth in school revenue and state aid should take into account the decline in the purchasing power of the dollar (i.e., inflation) and changes in school enrollment. In inflation-adjusted dollars per pupil,* total school revenue is projected to increase by 18.6 percent from FY 1993 to FY 2013, while state aid is projected to increase by 54.3 percent.

The increase in state aid needs to be considered in the context of the reduction in the general education property tax levy. The state buy-down of general education property taxes that culminated in the elimination of general education property taxes in FY 2003 represented increased property tax relief, not increased school funding. Thus, the best measure of the dollars available to fund K-12 education is total revenue, not state aid.

Furthermore, the 18.6 percent growth in real per pupil school revenue (which translates to an average annual increase of 0.9 percent per year) needs to be considered in the context of an increased concentration of English language learners and special education students within the total school population. In addition, advances in medical technology have allowed more medically fragile students to survive; as these students are mainstreamed into public schools, the cost of their care during the school day falls upon school districts. Finally, increased testing requirements and performance standards have increased school costs.

Even disregarding inflation and enrollment growth, school revenue growth comes nowhere near 328 percent. Based on school district revenue information from the February forecast "Price of Government" report, total school revenue is projected to increase by 132.8 percent from FY 1993 to FY 2013, while state aid to school districts is projected to increase by 202.9 percent. Again, this is before adjusting for inflation and enrollment growth.

The most instructive time period to examine in regards to school funding is the period since FY 2003, the first year of the state takeover of general education funding; FY 2003 is denoted by a dashed line in the graph below. From FY 2003 to FY 2013, real per pupil state aid is projected to decline by 15.0 percent. Projected growth in real per pupil school property taxes over this period will not be sufficient to replace state aid reductions. As a result, total real per pupil school revenue is projected to decline by 2.4 percent. Total public elementary and secondary school current spending per pupil in Minnesota has dropped below the national average. 


View "Total School Revenue and State Aid" graph



To make matters worse, these projections assume that there are no reductions in school funding in the current biennium or the next (FY 2012-13) in response to the state's massive budget deficit. Nor does it take into account the harm done to school finances due to aid payment shifts and delays.

The claim of "328 percent growth" in K-12 funding may become a standard right wing talking point, despite the fact that it is patently false. The unfortunate reality is that real state aid and total school funding have declined during the "no new tax" era. Minnesota's best chance at restoring a prosperous future lies not in short changing public education, but in making smart investments in our schools to ensure a productive workforce and an informed citizenry.

*All inflation adjustments in this analysis are based on the implicit price deflator for state and local government purchases, which is the appropriate measure of inflation for state and local governments.

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