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Parents United The Funding of our Public Schools www.parentsunited.org

Parents United The Funding of our Public Schools

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Page 1: Parents United The Funding of our Public Schools

Parents United

The Funding of our Public Schools

www.parentsunited.org

Page 2: Parents United The Funding of our Public Schools

Minnesota State Constitution

Section 1.”UNIFORM SYSTEM OF PUBLIC SCHOOLS. The stability of a republican form of government depending mainly upon the intelligence of the people, it is the duty of the legislature to establish a general and uniform system of public schools. The legislature shall make such provisions by taxation or otherwise as will secure a thorough and efficient system of public schools throughout the state.”

Page 3: Parents United The Funding of our Public Schools

How Public Schools are Funded

The legislature taxes, funds and regulates;

School boards dispense funds

Page 4: Parents United The Funding of our Public Schools

The Legislative Process

The Minnesota State Legislature works on a biennium basis.

One year for policy and the next for funding.

In its funding session, the Legislature sets the per pupil formula for the next two years.

Page 5: Parents United The Funding of our Public Schools

The Funding Process

Per pupil formula x AMCPU (adjusted marginal cost pupil units)

District Operating fund (General Fund)

Page 6: Parents United The Funding of our Public Schools

How Did We Get Where We Are?

1. A per pupil formula that has averaged 1.14% increase annually

2. State policies reforming property tax3. The 2001 General Education Buy

Down

Page 7: Parents United The Funding of our Public Schools

Per Pupil Formula Analysis prior to 2005 sessionYear Formula

AllowanceGeneral Increase

Actual “New Dollars”

Actual % Change

1992-93 $3,050 -- ---- 0.00%

1994-95 $3,150 $100 ----- 0.00%

1995-96 $3,205 $55 $55 1.75%

1996-97 $3,505 $300 ---- 0.00%

1997-98 $3,581 $76 $76 2.17%

1998-99 $3,530 $(51) $(49) -1.37%

1999-00 $3,740 $210 $150 4.25%

2000-01 $3,964 $224 $95 2.54%

2001-02 $4,068 $104 $104 2.62%

2002-03 $4,601 $533 $118 2.90%

2003-04 $4,601 ---- ----- 0.00%

2004-05 $4,601 ---- ------ 0.00%

Total $1551 $559 1.14%/annually

Page 8: Parents United The Funding of our Public Schools

Flat per pupil formula

The true per pupil formula grew an average of 1.14% annually

As in all labor intensive sectors i.e. health care and education, expenses grew an average of 5% annually

Page 9: Parents United The Funding of our Public Schools

How Did We Get Where We Are?

1. A per pupil formula that has averaged 1.14% increase annually

2. State policies reforming property tax

3. The 2001 General Education Buy Down

Page 10: Parents United The Funding of our Public Schools

State policies to reform property taxes

Class rates for taxing businesses were reduced to more closely resemble residential property tax rates

Agricultural and recreational land removed from the equation for school taxes

General Education Fund Buy Down

Page 11: Parents United The Funding of our Public Schools

Annual School Taxes 1997-2002 on a $250,000 Home

$2,643$2,437

$2,069$1,760 $1,772

$793

0

500

1000

1500

2000

2500

3000

1997 1998 1999 2000 2001 2002

Page 12: Parents United The Funding of our Public Schools

How Did We Get Where We Are?

1. A per pupil formula that has averaged 1.14% increase annually

2. State policies reforming property tax3. The 2001 General Education Fund

Buy Down

Page 13: Parents United The Funding of our Public Schools

General Fund Buy Down

In 2001, the state accepted the liability of funding 85% of

public schools cost Passed half of the legislation—the

liability was accepted, without a revenue stream to support it.

Destabilized the funding source for schools and now makes them reliant on the state’s economy

Page 14: Parents United The Funding of our Public Schools

Change in percent of school revenue from the state

86.30%

72.70%65.80%

60%

1997 1999 2001 2003

Page 15: Parents United The Funding of our Public Schools

Price of Government

The Price of

Government is the State of Minnesota’s official measure and is factored as total revenue as a percentage of personal income.

17%

16%

15%

1992 2002 2006

Page 16: Parents United The Funding of our Public Schools

What was happening with the economy?

Between 1995 and 2001 the state of Minnesota and the federal government experienced the largest surpluses ever recorded

Minnesota rose to rank 8th in per capita income of the fifty states

Residents received tax rebate checks in multiple years

Property tax reductions were enacted over multiple years

Business tax rates were reformed

Page 17: Parents United The Funding of our Public Schools

Requirements for public schools grew while funding did not

• Testing• Standards• Special education mandates• Transportation• English Language Learning• Days added to the school year• Health and safety mandates• Physical Education• HIV/AIDS Sex Education• Drug/Alcohol Abuse Education• Bus Safety• Title 1 programs• 100% Rule

Page 18: Parents United The Funding of our Public Schools

The 90’s

Growth IncreasesExpectations IncreaseCosts Increase

Income tax reductionsProperty tax reductionsBusiness tax rate reductions

Page 19: Parents United The Funding of our Public Schools

2005 Legislative Session Largest increase in K-12 in 14 years Schools needed 5%/5%--received 4%/4% Continued use of cross subsidy dollars Early childhood “increases” to 2003

figures Increased local prop tax by $139 million Used $95 million in tax shifts Used Cigarette taxes

Page 20: Parents United The Funding of our Public Schools

Per Pupil Formula Analysis after 2005 sessionYear Formula

AllowanceGeneral Increase

Actual “New Dollars”

Actual % Change

1992-93 $3,050 -- ---- 0.00%

1994-95 $3,150 $100 ----- 0.00%

1995-96 $3,205 $55 $55 1.75%

1996-97 $3,505 $300 ---- 0.00%

1997-98 $3,581 $76 $76 2.17%

1998-99 $3,530 $(51) $(49) -1.37%

1999-00 $3,740 $210 $150 4.25%

2000-01 $3,964 $224 $95 2.54%

2001-02 $4,068 $104 $104 2.62%

2002-03 $4,601 $533 $118 2.90%

2003-04 $4,601 ---- ----- 0.00%

2004-05 $4,601 ---- ------ 0.00%

2005-06 $4,785 $184 $184 4.00%

2006-07 $4,976 $191 $191 4.00%

Total $1926 $624 1.52%/annually

Page 21: Parents United The Funding of our Public Schools

So why should any of this matter to us?

Page 22: Parents United The Funding of our Public Schools

Minnesota Future Labor Force

0

150000

300000

450000

600000

1970-80 1980-90 1990-00 2000-10 2010-20 2020-30

Net Labor Force Growth

Page 23: Parents United The Funding of our Public Schools

The Boom Generation Turning 65 in 2011 More 65+ Than School Age by 2020

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1950 1960 1970 1980 1990 2000 2010 2020 2030

18-24

65+

5-17

Page 24: Parents United The Funding of our Public Schools

Minnesota’s Populations Of Color Are Much Younger

25.4

27.8

28.2

25.4

38.3

0 10 20 30 40 50

Black

Am Indian

Asian

Hispanic

White Not Hispanic

Median Age in Years

Page 25: Parents United The Funding of our Public Schools

Change In Minnesota School Enrollments 1999-00 to 2004-05 By Language Spoken At Home

-43,974

25,460

-18,514

-50000

-40000

-30000

-20000

-10000

0

10000

20000

30000

English Speaking

Total Non English

Total K-12 Students

Page 26: Parents United The Funding of our Public Schools

Special Education In the mid 1970’s, the federal government

mandated special education services. They were to have paid 40% of the cost of those services. They have never paid more than 18%.

In 2005, the state auditor’s report on public school costs showed that the greatest increases in school budgets were for special education.

Page 27: Parents United The Funding of our Public Schools

What do we need to do?

Define the cost of educating a child in the state of Minnesota.

Define the cost of educating that child if they have special needs, need English language learning support or qualify for free and reduced lunch

Study different funding formula models that may be used.

Page 28: Parents United The Funding of our Public Schools

Funding Study 2003 Funding Study commissioned Significant findings made public in 2004

• Those schools with higher concentrations of children who are English language learners, qualify for free and reduced lunch and/or have special needs have higher costs.

• Student access to quality local public schools should not be dependent on the property wealth of their district.

Today Education groups are having the study completed

Page 29: Parents United The Funding of our Public Schools

And…be part of the conversation How should schools be funded?

Taxes? Casinos? Sin taxes? Should schools themselves be revenue generators?

Vouchers/Tax Credits Who should fund schools?

What should the state’s responsibility be? What should the local taxpayer’s responsibility be? Should philanthropy be used and to what extent?

Page 30: Parents United The Funding of our Public Schools

“What the best and wisest parent wants for his own

child, that must the community want for all

children” ---John Dewey

Page 31: Parents United The Funding of our Public Schools

Addendum slides

Page 32: Parents United The Funding of our Public Schools

State and Local Taxes plus Government fees and Charges

Rank State % of personal income

1 Alaska 26.42 Wyoming 20.03 Delaware 17.94 New York 17.55 Louisiana 17.56 Maine 17.37 Utah 17.38 New Mexico 17.19 North Dakota 17.010 Mississippi 16.811 West Virginia 16.612 Minnesota 16.5

Page 33: Parents United The Funding of our Public Schools

Minnesota Taxes in Context

“Minnesota is a big government state if you measure it by taxes alone. But it collects less revenue than other states from user charges (such as tolls, tuition and permit fees) and from federal transfers*. Add all sources of revenue together, adjust them for the states’ population and per capita income and Minnesota is about average among the 50 states.”

*federal transfers are funding provided by the federal government to the state for projects such as Medicaid and transportation

Source: Minnesota Budget Project Star Tribune

Page 34: Parents United The Funding of our Public Schools

State and Local Taxes plus government fees and federal transfers

Rank State % of personal income 1 Alaska 34.1 2 Wyoming 28.4 3 West Virginia 26.6 4 New Mexico 25.4 5 North Dakota 25.4 6 New York 25.1 7 Mississippi 25.0 8 Montana 24.5 9 Louisiana 24.4 10 Nebraska 24.3 11 South Carolina 24.2 12 Utah 24.1 13 Oregon 23.3 14 Delaware 23.0 15 Vermont 22.4 16 Maine 22.5 17 Ohio 22.1 18 Alabama 22.0 19 California 22.0 20 Kentucky 21.9 21 Iowa 21.9 22 Arkansas 21.7

23 Washington 21.5 24 Minnesota 21.4