Thursday, May 14, 2015

Shaking things up in Special Education for MN

The state of Minnesota spends about 46% of its annual general fund budget on K-12 education. Minnesota served a total of 848,031 students, of which 126,809 had special education needs during the 2013-2014 school year.

How the formula works:
There is one large formula the state uses to string together all the different funding calculations it will send to a district. The first part is the general education allowance and it’s meant to serve as a foundation for all schools.

The second half of the large formula is for categorical aid and there are many subcategories like transportation, capital improvement and special education. The general education portion of the entire formula for total funds the state sends a school, is computed by multiplying the per pupil formula allowance by adjusted pupil units. The state calculates adjusted pupil units for a district by multiplying the amount of students in a grade by the weight for that grade. The special education portion of the entire formula is the sum of initial aid, excess cost aid, and cross-subsidy reduction aid. Initial aid covers portions of teacher salaries, classroom supplies, difference between general education allowance and cost to the district for educating a special education child, and summer programming for the aforementioned costs. Excess cost aid is given to a district that have a cost to educate special needs children, after the special education formula dollars are determined, that exceeds 4.36% of their general aid revenue. Cross-subsidy reduction aid is an addition to the special education part of the total formula that will only be in effect for the 2013-14 and 2014-15 school years.

Formula Redesign:
The three primary categories will transition into a census-based calculation inclusive of pupil count averages per district, poverty, size of district, and average cost of educating special education students. The state will change the excess cost calculations to be “the greater of 56 percent of the difference between the district’s unreimbursed nonfederal special education cost and 7 percent of the district’s general education revenue, OR 62 percent of the difference between the district’s unreimbursed old formula special education cost and 2.5 percent of the district’s general education revenue.” Cross-subsidy reduction aid, created to last only 2 school years, will change to “Average Daily Membership (ADM) served times the sum of $450 plus $400 times the district’s poverty concentration factor, plus .008 times the district’s ADM served. The poverty concentration factor equals the number of students eligible for free lunch plus 1⁄2 of the number eligible for reduced price lunch divided by the district’s total enrollment.”

Redesign of the pupil weights for the general allowance formula rolled out at the beginning of the 2013-14 school year and the changes to special education roll out this fall. Further complexity could be added to special education expenditure if universal pre-school legislation is enacted. This would mean three large changes to the entire K-12 education formula in less than a five-year time frame. The changes to special education expenditure calculations appear for now to be in the best interest of districts, but time will tell.

Here’s how MN stacks up to a couple of its neighbors:

Total K-12 Education Expenditure
% of Total State Budget



Special Education Expenditure



% of Total Education Expenditure



Total Student Population



Special Education Population


unable to locate

For further reading:
House Education Finance Committee. "Minnesota K-12 Education Finance System Context and Overview."

Legislative Services Agency. "Overview of School Finance in Iowa." p 42, 47, 78.

Minnesota House of Representatives Fiscal Analysis Department. "Financing Education in Minnesota."

Minnesota Department of Education. "Minnesota Education Statistics Summary."

"Wisconsin Department of Public Instruction Summary of 2013 Wisconsin Act 20 Final 2013-15 Budget With Vetoes."

Wisconsin Department of Public Instruction. "Wisconsin Public Schools at a Glance."