Educating Minnesota's Youngsters

Minnesota is planning on spending about $15 billion over the next biennium on education, $7.8 billion/year. Of that total expenditure funding from the state for early childhood education is only about $30 Million. In order to be able to realize the

true returns for or money much more is going to be needed, about $1.5 Billion dedicated to an endowment, the money from which will go to fund scholarships for impoverished families for early childhood education. The whole formulas may need to be rewritten and policy should change.

Per Student Minnesota only spends about $271/student. The Rand Corporation shows that at least $2,000/child is needed to gain measurable, substantial results. All studies show that if the investment is used wisely then there can be great benefits and savings to the state. The High Scope program in Michigan has shown that the benefits to the community are vast and that there are great

potential savings to the state. Their studies show that each dollar spent on their program returns $7.16 in savings to the state. Over a 40 year study of some students from the same high risk neighborhoods and moving through the same schools, those who participated in the early childhood showed measurable and sometimes drastic improvements in major categories shown here.

Major policy changes are going to be needed in Minnesota to the early childhood education system if there are going to be any change in the achievement gap. This is a large ask when we as a state seem to be unwilling to pay the necessary taxes to support the programs we ask so much out of, when we give them so little to work with.

Here We Go Again, Schools Lose As Minnesota Legislators Fight Over School Funding

Last year, the Minnesota State Legislature did not pass an Omnibus K-12 spending bill. Hours before midnight on the final day of session, the Minnesota House of Representatives amended the bill and successfully passed it, and that’s as far as it went. One of the key sticking points that held up the bill in the House was the inclusion of a new spending proposal known as "The New Minnesota Miracle." The intention of the new spending changes according to the then Chair of the K-12 Education Finance Committee Mindy Greiling was to:

“Fundamentally change the way the state funds public education. The new miracle would raise education funding for every pupil, and help to make students ready for success. The ready for success component of this plan is to prepare students for their life after high school, whether they choose to attend a university, technical college, trade schools, or enter the job market.”

One of the fundamental ways this plan would accomplish this goal was to increase the basic school funding allowance per pupil from $5,124 to $7500, and index it to inflation. In addition, compensatory revenue for schools with special needs such as providing reduced price lunches, provide assistance to students who are non-native English speakers, and give relief to school districts that have sparsity issues (low populated districts where students are disbursed over a large land area). Overall, the bill called for an additional $1.7 billion per year in K-12 education spending.

However, that was then, and this is now. Under the Republican controlled House, the squabble over school funding isn’t on the merits of appropriating additional funding to schools. It’s now about cutting spending on school programs, teacher development workshops, and freezing compensatory revenue. Some of the actual passages in the bill related to these topics include:

2011 Omnibus Education Bill Summary

· (b) Repeals the staff development set-aside (§ 122A.61), the January 15 late contract deadline penalty (§ 123B.05), and training and experience revenue (§ 126C.10, subd. 5) effective for revenue for fiscal years 2012 and later.

· Compensatory education revenue - Delinks compensatory revenue from the basic formula

· Secondary sparsity revenue - Delinks secondary sparsity revenue from the formula allowance.

· Elementary sparsity revenue - Delinks elementary sparsity revenue from the formula allowance.

· Basic revenue - Increases the basic formula allowance from $5,124 to $5,174 in fiscal year 2012

The dispute doesn’t stop there, unfortunately. Some provision in the bill take aim at the collective bargaining rights of teachers including issues surrounding negotiating teacher contracts, and eliminating conditions under which teachers could strike. Education Minnesota’s President Tom Dooher urges Governor Mark Dayton to veto the bill citing amongst other things “Wisconsin-style attacks on collective bargaining rights.”

While the battle over school funding continues at the state capital, schools are continuing to struggle year in and year out. It’s bad enough to dramatically shift the discussion of school funding from providing necessary additional funding one year, to cutting and freezing the very next. What’s even worse is that this year’s K-12 appropriation is financed by next year’s debt. One of the best choices we can make as a state, whose economy can be classified as stagnant at best, is to invest in human capital in order to promote growth. It’s one of the surest ways to collect benefit more from in the future than we have to pay for in the present.

Does privatization of education make sense?

The idea that government or specific government services should be privatizes may not sit well with many of us who work or plan on working for government, but here it goes. With the budget crisis not looking like it will be solved any time soon, aid to state and local governments being cut and a potential federal government shutdown on the horizon, there is sure to be more discussion around the idea of government services becoming privatized.

The most often cited reason for privatization is that the government has created a monopoly and opening it up to the private market would promote competition and thus produce better results.

John Stossel, a reporter for ABC, wrote a piece on education, stating that choice is what will move education to the next level and the monopoly that government holds over education is holding our country back.[1] A Brookings Institute article also points to choice as the reason for privatization of our education system.[2] Many state that introducing choice is the way to improve education and choice means taking away the monopoly that government has on education. The following video points to choice and competition as the means to improving education: http://www.youtube.com/watch?v=KSHzuNUmGLw&feature=related

The Cato Institute released the following video: http://www.youtube.com/watch?v=TIGmU2wJm-A , The video lays out types of government monopolies and provides reasons why education is a bad business for government to be solely involved in.

Another reason many are for privatization is the finances. Government employees are being paid more than private sector employees[3] and aid is being cut, It is clear that with increasing wages and lack of funding, many are looking for new ways to spend less. The University of Michigan examined privatizing the school to help relieve some of the financial burden.[4] While some are hoping privatization will save money, some say that privatization will cost more in the end. [5]

While some see privatization as the way to bring choice back to the American public, the financial crisis may potentially hold some schools back from making such decisions.[6] Major changes may be too drastic for our current political environment, but people will not stand for education to fail the future leaders of America.

As wages rise, demand increases and people expect more from their schools, will there be a greater push to privatize education? Only time and the American voters will tell. No matter what side you are on, we can all agree that our education system can and should do better.

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[1] http://www.creators.com/opinion/john-stossel/education-too-important-for-a-government-monopoly.html

[2] http://www.brookings.edu/reports/2010/0202_school_choice.aspx

[3] http://www.nytimes.com/interactive/2011/03/06/us/public-private-employees.html

[4] http://www.time.com/time/business/article/0,8599,1893286,00.html

[5] http://chronicle.augusta.com/news/education/2011-04-06/school-choice-plan-cost-state-133-million?v=1302134099

[6] http://www.publicschoolreview.com/articles/127

Tax Benefits for Education

In case you’re one of the many who have been putting if off, you now have about 6 weeks left to file your 2010 income taxes. As you search high and low for credits and creative deductions, don’t forget to take advantage of the tax incentives available for higher education.

Several options are available for people currently in school. The American Opportunity and Lifetime Learning Credits of up to $2,000 are available for tuition and related education expenses including fees, books, supplies, and equipment (only the Lifetime Credit applies to grad students). This is a great deal because, being credits, the amount of tax you owe will be directly reduced. Another option is the tuition and fees deduction of up to $4,000 in educational expenses. You cannot double-dip, however, and should figure out whether the credit or deduction gives you the most benefit. Some good news – educational expenses paid from student loans do qualify for both of these options. For those of you who are still paying loan interest on your undergrad loans or diligently keeping up with current interest, don’t forget to take the student loan interest deduction of up to $2,500. Both of these deduction options are taken as adjustments to income, which means itemization is not necessary.

Admittedly not as applicable to us right now, the IRS also provides tax incentives for education saving. Although contributions are not deductible, deposits of up to $2,000 per year to Coverdell Education Savings Accounts grow tax free until they are distributed. These accounts can also be used for certain elementary and secondary school expenses. Generally when someone receives student loan payment assistance or loans are forgiven, a taxpayer must include the forgiven amount in their income. However, this income may be considered tax-free when you work for certain time periods, in certain professions (like public service), or for certain classes of employers. Qualified Tuition Programs (QTPs), also called 529 Plans, allow you to prepay for postsecondary education with the qualified distributions being tax-free. Early distributions from IRA’s (prior to age 59 ½) usually trigger a 10% additional tax fee; however, this additional tax is waived if the distributions are used for higher education expenses. You may still have to pay traditional income tax on the withdrawal. The interest earned on certain savings bonds will not be taxed when used to pay for qualified education expenses, and benefits of up to $5,250 from employer-provided educational assistance can be excluded each year. Finally, certain business deductions can be taken for work-related education.

The details of some of these tax treatments can get pretty sticky and there are restrictions on concurrent use, however, it is worth figuring out how to make these options work for you. I know I can use every penny I can get, and it's still not enough! For more details on all of these tax benefits for education, refer to IRS Publication 970: http://www.irs.gov/publications/p970/index.html

Budget Deficits and Educational Reform

In February of 2010 the Governor of Minnesota, Tim Pawlenty, submitted a supplementary budget proposal to the state legislature that, amongst other things, cut higher education spending by $47 million dollars. Faced with a $994 million budget deficitfor the current budget biennium , and massive $5.8 billion dollar projected deficit for the 2012-13 biennium, the Governor used his budgetary authority to take steps to solve the budget crisis. These budget cuts will result in tuition increases, layoffs of college and university employees, and even the discontinuation of some programs by a few institutions across the state. Cuts to higher education can be considered short-sighted when considering the already rising cost of tuition, which puts at risk both the competitiveness of Minnesota’s workforce in the coming years, as well as the state’s reputation as a leader in education.

Standing by his pledge to not raise taxes Pawlenty instead made cuts to higher education which were was shared between the University of Minnesota system that incurred a $36 million dollar cut, and the Minnesota State Colleges and Universities system (MnSCU) which had $10.5 million slashed from the budget. A year earlier Pawlenty cut $63 million dollars for higher ed., and also used the now unconstitutional power of unallotment to cut it further. Just a month after Pawlenty’s announcement, Minnesota State Mankato announced that 28 programs and 13 percent of the full-time faculty would be cut. St. Cloud State University also reacted by cutting 23 programs because “the state has limited the school's ability to raise tuition while at the same time cut money for higher education.” The University of Minnesota has been forced to respond with yet another tuition increase. These funding cuts and tuition increases come at a time that has already seen a historic rise in the cost of college tuition. The increase in tuition costs rose by 439 percent from 1982 to 2007 for a four year public institution. Meanwhile, state grants are close to running dry and unless more money is found “students who received an average of $1,700 last year will see a roughly $300 cut when they return to class this fall”.

All of these factors converge toward an uncomfortable, but seemingly unavoidable reality – college is becoming too expensive for everyone to have the opportunity to go. This hurts Minnesota both from an equity standpoint and also has long-term economic consequences as well. Minnesota has always valued educational opportunity for everyone that wants to go, and this has pushed Minnesota to become of the most economically developed states in the country. In a global economy, the demand for highly skilled, highly educated workers is higher than ever. Competing in the global market place requires a skill set for workers that is attractive for investment, and also one that increases the entrepreneurial capacity of the populace.

One possible solution would be to introduce a flexible tuition system, which alters tuition cost depending on the field of study. The proposed reform would seek to expand enrollment in programs – like math, engineering, finance and the sciences - that produced higher economic outputs by reducing tuition costs for these programs. The effects would be two-fold; first it would make college affordable for groups of socioeconomic classes have been increasingly excluded, and would also provide a pathway to success in a high demand field. Second, reform would expand future economic opportunity by training a new generation of highly skilled workers. Investing in human capital with a higher potential for long-term economic payout would improve MN budget outlook and increase entrepreneurial activity in the state.

Minnesota Miracle: Part Deux?

In the past, when education financing came up in conversation local gophers might have mentioned the “Minnesota Miracle” – the 1971 bi-partisan effort to reform the state’s property-tax-based funding of public education.  For over thirty years the effects of these reforms helped to reduce the disparity between localities with different property tax bases. 

These days, education financing brings a different phrase to mind:  “Race to the Top.”  And in this case, Minnesota’s performance is far from miraculous.  At a time when the state faces a $4.8 billion two-year deficit and K-12 and Higher Education expenses total 50.3% of total general fund expenditures, President Obama’s offer of $4.35 billion in competitive grants to states that have progressed and show promise to make improvements in four key areas is tempting, to say the least.  The critical reform areas are:

•  Adopting rigorous standards and assessments;
• Recruiting and retaining effective teachers;
• Turning around low-performing schools; and
• Establishing data systems to track student achievement and teacher effectiveness.

Delaware and Tennessee won the first round of The Race, taking home a combined $600 million for their reform plans.  According to Secretary of Education Arne Duncan, "Both states have statewide buy-in for comprehensive plans to reform their schools. They have written new laws to support their policies. And they have demonstrated the courage, capacity, and commitment to turn their ideas into practices that can improve outcomes for students."  Minnesota (along with 38 other states) fell short of the top spot by over 70 points, scoring just 375 out of the total 500 possible.  Marks against the state’s plan included that it failed to demonstrate progress in closing the achievement gap, in equitably distributing effective teachers and principals, and that it lacked “alternative pathways for aspiring teachers and principals.” 

Going in to the competition and following the release of the winners, Minnesota Department of Education and Governor Pawlenty complained that Education Minnesota – the statewide teachers union – was “dragging down the state” and keeping Minnesota from making reforms through the years.  The lack of union support for the plan (just twelve percent signed on to the state application) led reviewers to question whether Minnesota educators shared a coherent vision and whether they had the “political will to dramatically improve schools.”  However, as seen below, Education Commissioner Alice Seagren and Governor Pawlenty were not ready to admit defeat.  

  

States may compete for a second round of Race to the Top funding by a June deadline.  Pawlenty says Minnesota will only compete again if the state legislature enacts new laws and that Education Minnesota needs to “lighten up, loosen up its grip on the status quo.”  Education Minnesota President Tom Dooher says Pawlenty’s “’take it or leave it’ ultimatum makes it clear he’s made a decision to not attempt a second application.”  Who to believe?  And what is it about the status quo that must be changed? 

One point of disagreement is whether Q Comp, Pawlenty’s voluntary teacher performance pay system, should continue to be expanded throughout the state.  Q Comp is currently funded by $169 in state aid and up to $91 in local funding per enrolled pupil.  A Star Tribune investigation revealed over 99% of participating teachers received pay increases through the program during the most recent school year.  Given the high cost and low accountability within the program, Education Minnesota would prefer the dollars be added to general school to reduce class sizes, increase resources, and update materials. 

State lawmakers are currently moving to pass a set of reforms by May 1 to facilitate a more competitive application.  New plans include alternative pathways to teacher licensure, strengthening teacher training, and enhancing the effectives of teaching evaluations.  If the resulting legislation spurs a second Race to the Top application, if that application is successful, and if the resulting funding enables meaningful reforms for all meaningful students, perhaps we will have a second miracle in Minnesota.  But then, miracles don’t often happen more than once…

How Healthy is the Dream?

If you have not had the chance to view this you tube video of Susan Boyle singing I Dreamed a Dream from Les' Miserables it worth a look if you enjoy watching Simon looking stunned. The clip is fantastic but it is the title of the song that interests me more for this posting, in many cases we dream of opportunities and many of them are available in the United States. One of those opportunities is education which is available through our public school system, but that opportunity comes with a price tag which is currently supported on the local level through state aid, property tax levies and bonding referendums. Given the current economic environment one may ask how healthy is the dream of providing quality education, particularly on the local level?

The Minnesota Legislature's House Research Department provides a great guide to education finance that defines pertinent terms, explains the formulas used to determine aid available to school districts, and reports on the amount of aid available to individual school districts.

In particular, the bonding referendums are the most interesting to me. The Fiscal Analysis Department, Minnesota House of Representatives has a fairly easy to understand description of referendum funding requirements and how state aid is used to equalize funding across districts that have varying tax bases. Without some of this background information I would struggle to understand the complicated formulas used to determine how education is funded.

Independent School District (ISD) #276 in Minnetonka makes an interesting case to change referendum requirements. They contend that, in the past referendum funding was used to support and provide services outside core educational requirements. Now, it appears that referendum funding may need to be used to provide the core services. Because the state issues a cap on referendum funding for school districts each year and state aid has been decreasing, ISD #276 proposes removing the cap and allowing school districts to pursue additional dollars through referendum. To view their proposal, take a quick look at page three of this document, . Will proposals such as Minnetonka's keep the dream of education healthy or will it cause additional or long term issues? I am interested in hearing your thoughts.

Why Does My Tutition Keep Going Up?

Nearly everyone likely to read this blog is aware that college tuition and fees have risen considerably over the past 25 years or so. A report released this last December, "Measuring Up 2008," found that tuition and fees have risen 439 percent since 1982 while median family income has only risen 147 percent during the same time. Unsurprisingly, students and families are piling on more debt and access is declining. This figure shows just how dramatically college costs are outpacing inflation and even medical care.

What is going on? Are colleges and universities spend-thrifts?

According to the Delta Cost Project, the answer is generally no, although there are differences between public and private institutions. For the most part, spending is not dramatically increasing over inflation, except in research spending. In the case of public universities and, especially, community colleges, tuition increases are mostly the result of cost-shifting. State subsidies to higher education have been declining over time in Minnesota and in nearly every state. About 92 percent of tuition increases in public research universities is due to cost shifting. Spending is actually declining in real terms at every other type of public post-secondary educational institution.

The situation is slightly more complex at private institutions, because they vary so much in size, wealth, and mission. Harvard, Yale, and the rest of the Ivy League received a lot of attention until recently over the massive size of the endowments and their low rate of endowment draw. These institutions tend to skew the data regarding spending, because they essentially went on spending binges during the long run-up of endowments since the mid-nineties. Only about 30 percent of tuition increases at private research universities was because of cost-shifting, the rest went to spending increases.

At other private institutions, the story is more similar to public institutions. According to that same study, about 85 percent of tuition increases was due to cost-shifting. The truth is that most private institutions are heavily dependent on student revenues and the exceptions are places like Harvard, Carleton College, and Macalester College.

Despite cost-shifting, some spending is taking place. Where is it going?

The biggest spending increase has occurred in institutional aid, a practice called tuition discounting. This practice is more common at private colleges and universities, but grant aid has increased at nearly every institution.

The next biggest category of spending increases occurred in sponsored research. In general, this does not have any effect on tuition, up or down.

The last major increase in spending is in student services and remedial education. Very little of this funding is directly related to instructional spending, it is for support programs and expanding access to post-secondary education.

So, which state spends the most on education and research per student at research universities? Minnesota at $21,400 (only Pennsylvania and Connecticut also spend over $20K).

How much do students at the U pay, on average, of that cost? $9,533 or about 44%.

The national per student average for education and research spending is $14,058 while students are expected to cover about $6,909 or 51% of the total.

Charter School Reports

The Minnesota Office of the Legislative Auditor has published three different reports on charter schools. The first report from 2003 evaluated charter schools' financial status, the adequacy of financial oversight, and the effectiveness of the state's lease aid program.

The second report from 2008 evaluated the performance, oversight, and accountability of charter schools. Finally, there is an update to the 2008 report. Enjoy...

User Charges to Finance K-12 Education

I was surprised to read in Fisher that "among all state and local governments, local school districts rely on user charges least." This goes against what I have heard anecdotally from friends and family members that are parents and/or teachers. Most parents that I've talked to feel that school districts have steadily increased user charges for auxiliary or extracurricular services like meals, transportation, athletics or after-school programs and clubs. Part of this may be due to the high visibility of user charges in K-12 schools compared to user charges in other state and local governments.

Wassmer and Fisher (2000) argue that school districts should increase user charges to "either supplement revenue or permit a tax reduction" in part because "these types of services tend to provide substantial private benefits" and "may be consumed by only a fraction of students in a school." One of the reasons that public school districts in Minnesota haven't used school fees to a greater degree is because state law prohibits public school districts from charging fees for necessary goods and services. These include instructional materials and supplies, required library books, required school activities, graduation caps and gowns, lockers, and student transportation to and from school for students that live more than two miles from the school. The argument for imposing these limits on school fees is that the state has a constitutional obligation to provide free public education to all students and therefore cannot deny students an education based on students' ability to provide books or other educational supplies needed to complete their educational requirements.

Many public school districts would not be able to offer extracurricular activities without the revenue generated from user charges. However, these charges create inequity among students and potentially lower quality education for lower income students. The positive effects of extracurricular activities such as academic clubs, music, art or athletics on educational outcomes have been well-documented. If lower income students do not have access to these activities, their education and quality of life are negatively affected. Inequities between school districts can also happen when affluent school districts are able to charge fees and spend at above-average levels compared to less wealthy districts. Check out this 2008 Information Brief from the Minnesota House of Representatives Research Department for a summary of Minnesota state law governing authorized and prohibited public school fees, the education expenses allowed under the state’s education tax deduction and credit, and an outline of student user fees in other states.

Finally, what is your experience with school fees? Do you think the use of school fees should be increased? Are school fees more acceptable than general tax increases? Are people with a "liberal or left-leaning political bias" more concerned about equity than conservatives as Fisher suggests?