My paper examined Minnesota’s K-12 education
expenditures, which (when combined with local government expenditures from
property taxes), is the largest expenditure category of public funds in the
state.[1] The assessment addressed expenditure issues
through a discussion of K-12 revenue sources and general education aid
appropriation, standardized test performance, and the charter school model in
Minnesota.
Currently, K-12 education expenditures in
Minnesota are funded through an assortment of federal, state, and local revenue
streams.
Funding for K-12 education is overwhelmingly
supported by state sources (see Figure 1), relative to federal categorical
funding programs (e.g., transportation, special education) and local funding
(through property tax levies), but this has not always been the case. Historically,
the property taxes levied by school boards were the primary source of revenue
for schools (see Figure 2).[2] The
state currently uses a funding formula called the general education revenue
program, which has been relatively stable since it was adopted in 1988.[3]
Charter Schools
The presence of charter schools has been a contentious issue before the enabling statutory legislation was even passed in 1991. Proponents argue that they increase competition and quality of schools, and that families have a right to access this alternative, innovative education option that provides flexibility, creativity, and programming to fit students with unique needs. Simultaneously, opponents believe charter schools divert public funding from schools with more pressing needs by driving down enrollment (and associated per-pupil funding).
How Does Minnesota Compare?
Figure 3 displays the share of
public school spending per $1,000 of personal income in Minnesota, relative to
the U.S. average. While real personal income of Minnesotans grew at above
average rates between FY 1995 and FY 2003, the significant takeaway is that education
spending significantly dropped following FY 2003. Between 2003 and 2013,
real spending at the state level decreased by 13 percent, which includes a
significant amount of local property tax increases that were unable to fully
account for these decreases that stemmed from Governor Tim Pawlenty’s “no new
taxes” administration.[6]
Perhaps not surprisingly, students
in the state’s K-12 system perform higher than national average in reading,
mathematics, and science, and are on-par with the national average performance
in writing.[7]
However, while this reflects positively on the state and its ability to achieve
these results with less (relative) funding and the charter school system, these
performance outcomes hide a critical challenge for K-12 education within Minnesota: racial disparities in
Minnesota schools. While Caucasian students consistently score well above the national average in the state, African American students score 35 (scaled) points
below Caucasian students in Minnesota), and Hispanic
students score 32 points below Caucasians. These intrastate scoring
disparities are only larger in eight states for African American students and
three states for Hispanic students.
These results may lead one to
wonder why Caucasian students are performing so much higher than African
American and Hispanic students in Minnesota. Unfortunately, this achievement
gap is fundamentally linked to the state’s lack of balance between allowing
local funding control through property tax levies and its mandate to equalize
revenue across school districts. Simply put, the state is not effectively
redistributing funding, despite the mandate to do so. In FY 2008, for example, Minnesota
school districts within the top five percent of general education revenue had
over 20 percent more revenue per pupil than districts in the bottom five
percent.”[8]
[1]Minnesota
School Finance History, Minnesota Department of Education, October 2012, http://www.house.leg.state.mn.us/hrd/pubs/mnschfin.pdf
[2]Ibid
[3] Understanding Education Finance, Center for Public Finance Research, 2008, http://www.mntax.org/cpfr/documents/UEF07-08UpdateFINAL.pdf.
[4] Ibid
[5] Financing Education, Minnesota House of Representatives Fiscal Analysis Department, August 2010, http://www.house.leg.state.mn.us/fiscal/files/10fined.pdf.
[6] K-12 Spending in Minnesota Again Below the US Average, Minnesota 2020, 2010, http://www.mn2020.org/issues-that-matter/education/k-12-spending-in-minnesota-again-below-the-u.s.-average
[7] National Center for Education Statistics, accessed April 29, 2013, http://goo.gl/bBJku.
[8] Understanding Education Finance, Center for Public Finance Research, 2008, http://www.mntax.org/cpfr/documents/UEF07-08UpdateFINAL.pdf.
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