Pawlenty "Holds Back" Equity In Funding for Public Schools

In trying to find a topic for this blog post I solicited the help of my brother, Andy Fyten, who is a school administrator and teacher for a local charter school in north Minneapolis. When I asked him if there are any big funding issues facing public schools right now he immediately responded with one word: "holdback"

What my brother is referring to is the percentage of state per pupil education funding held back from all public schools in Minnesota in a fiscal year. A "holdback" is a state of Minnesota education finance tool that withholds a certain percentage of allocated per pupil school funding until the state sees final enrollment statistics from every public school. Once the state receives the final enrollment statistics the funding that was withheld is distributed to schools in the first half of the following school year. The amount each school receives is proportional to the previous year's final enrollment statistics.

By statute, 10% of education funding in Minnesota is held back. But last summer Governor Pawlenty, using unallotment, increased the figure from 10% to 27% in an effort to cut the state budget without increasing taxes. This action sent public schools scrambling to make up for an unexpected 17% current school year budget shortfall since schools count on per pupil funding to balance their budgets. This site does a nice job of depicting the impacts of the 27% holdback.

This action by the Governor has significantly impacted charter schools in particular because charter schools have a much greater reliance on state per pupil funding than many district public schools do, especially in low income areas where there is very little property tax revenue to help pay for public schools. However, this map shows that in comparison to the rest of the country, Minnesota charter schools are funded by the state at a much higher level than in most states.

Nevertheless, charter schools seem to be feeling the crunch more in Minnesota. According to this post, charter schools in Minnesota are having to take out loans just to pay their teachers. This means that future school funding is going to have to go towards paying interest on these loans when the funding really should be going directly into the classroom. I know at my brother's school they have already been forced to fire two teachers because of the budget shortfall created by the 27% holdback imposed by the Governor.

The significant impacts of the 27% holdback on charter schools I believe demonstrates the bigger issue at hand: funding equity. Essentially, the Governor's decision has a much more severe impact on students and schools in low income areas when compared to its impact on students and schools located in higher income areas.



The chart above (taken from this site) illustrates that, on average, about 42% of public school funding comes from local property taxes. Therefore, schools situated in low income areas rely more on state funding. So when the state cuts funding to public schools across the board, schools that are situated in low income areas are affected much more severely. I think we can all agree that students going to public schools in low income areas are suffering enough. So the last thing they need is the state imposing a statute that forces them to suffer even more than students going to public schools in higher income areas. So in the future if the Governor defends his 17% increase in education funding holdback by saying that it impacts schools across the board equally, don't buy it.