Thursday, May 16, 2013

How Much?! Minnesota’s Education Funding Formula and Its Implications

One of Minnesota’s largest expenditures is K-12 education—in FY 2010-2011 it accounted for 22.8% of total expenditures and the greatest expenditure of general fund dollars, at 37.1%. However, understanding how much is spent per student on average, let alone the calculation for funding the education of each particular student is a far more difficult answer to ascertain.

Funds and Weights and Levies, Oh My!
Education funding formulas are tricky.  Large committees, expensive consultants, the blood, sweat, and tears of countless legislative aides and months worth of time—in some cases, years—are devoted to constructing and perfecting the formula. Yet, very often, they remain far from perfect.

Historically, education has been funded by property taxes assessed at the local level with proximity being one of the primary rationales.  Schools are a critical element of any community and highly visible institutions, so it made sense that one’s property taxes funded one’s schools. However, given the wide variation between large property tax bases (which can include commercial, industrial, and natural resource producers in addition to residential) and the income and wealth of residents, the fact that funding formulas rely on property taxes can lead to significant fiscal inequities. In an effort to reduce these inequities, Minnesota, not unlike many states, has shifted the bulk of funding for K-12 education to the state, which funds K-12 education through the use of a funding formula.

There is 116 pages devoted to explaining the formula to the Minnesota legislature, but suffice to say, when all is said and done, funding per student in Minnesota looks like this:

Chart I: Breakdown of Minnesota Per Pupil Expenditures
State Total
Total PK-12 Operating
Expenditures per Pupil *

Total PK-12 Charter Operating
Expenditures per Pupil
*Excludes charter schools

Or, depending on who is asked and when, the average (mean) could also look like this:

Chart II: Alternate Accountings of Minnesota Per Pupil Expenditures
Amount (Year)
$11,533 (2009)
$11,073 (2010)
$11,034 (2010)
$10,685 (2013)
**Sources do not indicate whether charter schools are included.

So how are we doing compared to other states?
According to the Annie E. Casey, Minnesota ranks 27th nationally and comes in below the average spending in the United States ($11,824), spending $11,034 per student:

A second ranking provided by the Education Law Center and Rutgers University ranks Minnesota 16th, spending $11,533 per student, but fourth for funding distribution, based on the progressive distribution of its funding and the best in the north central region:

So we’re mostly good, right?

Not exactly.

According to the Association of Metropolitan School Districts, there are five key education funding facts that indicate our funding formula is in need of overhaul:

-      Education funding has not kept pace with inflation over the past decade
-      School payment shifts have forced districts to borrow money to pay expenses
-      The State is not paying for its share of mandated special education costs
-      The State mandated increase in the employer contribution to the Teachers Retirement Association has further strained school budgets
-      Schools must education students who have far more challenges than ever before—including increases in number of students in poverty, with limited English proficiency and eligible for special education services

Additionally, Schools for Equity in Education (SEE) questions whether the estimated expenditure in recent recommendations by the Minnesota Education Finance Working Group reflects “the true cost of educating a student in today’s world”.

Two working group reports later (one and two), Minnesota is remains more progressive than most states in regards to its education funding, but it also leads the nation in poor outcomes for students of color and who are “high-need”. Given that it is one of the largest expenditures of the state, the outcomes of the expense are not what they should be and in some cases appear to be a misuse/waste of funds. Although Minnesota is not alone in its challenge to ensure that its school finance formula is adequate, equitable, sustainable, and transparent, it must get serious about changing the way in which it allocates expenditures to ensure that all students have


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