Funding Minnesota Schools Presentation to Robbinsdale LAC September 29, 2009.
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Transcript of Funding Minnesota Schools Presentation to Robbinsdale LAC September 29, 2009.
Funding Minnesota Schools
Presentation to Robbinsdale
LAC
September 29, 2009
Financing Minnesota’s Public Schools
Minnesota’s public schools are financed through a mix of state aid and local property taxes. Most of the financing is based on the number of pupils served by each school district. This packet sets the context for school funding.
•The first several pages highlight Minnesota’s general fund budget and the portion used for K-12 programs.•The next group of pages provide a cursory review of school districts’ role in the property tax system and contrasts school district funds from state and the local property tax levy.•The next several pages display enrollment trends and some general school district characteristics.•The last few pages show graphs of school revenue and expenditures by category.
09/29/09
Summary of State Resources
The state raises revenue through a variety of taxes including:• Individual income tax; • Sales tax; • Corporate income tax; • Statewide business property tax; and • Other smaller taxes.
3House Research Department
09/29/09
Summary of State Spending
The state spends its revenue on programs including:• K-12 education;• Health care and human services spending;• Higher education;• Local government aids; and• Other smaller programs.
4House Research Department
Unallotment• The Governor has used extraordinary powers granted to
him under the unallotment statute (Minn. Stat. section 16A.152, subd. 4) to reduce spending in a number of areas and to implement delays in school aid payments that mimic the property tax recognition and aid payment shifts.
• The Governor has lowered the portion of each district’s state aid that is paid in the current year from 90% to 73% of the district’s aid entitlement beginning in FY 2010. – In the next year, the Governor intends to withhold state aid in May
and June to cause aid savings similar to the savings that would result if the property tax recognition shift had been enacted in law.
09/29/09 5House Research Department
Unallotment• These aid payment shifts save the state about $1.7 billion
in the 2010-11 biennium and while they affect school districts’ cash flow and borrowing needs, do not affect school district revenue.
• The Department of Finance has not yet reissued fund statements, so the following graphs show state aid prior to the unallotment activities.
09/29/09 6House Research Department
Where the Money Comes FromFY 10-11 General Fund $31.463
Billion
09/29/09
Individual Income47%
Liquor/Cigarette2%
Corporate/Bank4%
Sales27%
Motor Vehicle0%
Statewide Property Tax5%
Non-Tax Revenue2%
Fund Balance In2%
All Other10%
MA surcharges1%
Gambling Tax0%
Chart Title
7House Research Department
Where the Money GoesFY 10-11 Spending $33.789
Billion
09/29/09
K-12 Education40%
Higher Ed9%
State Govt3%
Intergovt Aids10%
Criminal Justice5%
Health&Human Services
27%
Environment & Eco Dev2%
Debt Service3%
All Other1%
Chart Title
8House Research Department
Where the Money Comes FromFY 10 General Fund $15.353
Billion
09/29/09
Individual Income46%
Liquor/Cigarette2%
Corporate3%
Sales27%
Motor Vehicle0%
Statewide Property Tax5%
Non-Tax Revenue2%
Fund Balance In4%
All Other10%
MA surcharges1%
Gambling Tax0%
Chart Title
9House Research Department
Where the Money GoesFY 10 Spending $16.309 Billion
09/29/09
K-12 Education40%
Higher Ed9%
State Govt3%
Intergovt Aids10%
Criminal Justice5%
Health&Human Services
27%
Environment & Eco Dev2%
Debt Service3%
All Other1%
Chart Title
10House Research Department
09/29/09
Property Tax Overview
Property taxes have been a major part of school district funding for most of the last 100 years. Changes made by the 2001 Legislature have substantially reduced the share of property taxes that go to school districts but school districts are still the second largest user of property taxes.
11House Research Department
Taxable Market Value by Property Type
Taxes Payable in 2009 $581 Billion
09/29/09
Residential Homestead
58%
Other Residential11%
Commercial/Indust15%
Agricultural11%
Seasonal Rec5%
Chart Title
12House Research Department
Taxes Paid by Property TypeTaxes Payable in 2009 $7.713
Billion
09/29/09
Residential Homestead
47%
Other Residential11%
Commercial/Indust34%
Agricultural5%
Seasonal Rec3%
Chart Title
13House Research Department
Property Taxes Payable in 2009By Type of Government $7.713
Billion
09/29/09
County31%
Special4%
City22%
TIF4%State
10%Townships
2%
School Districts27%
Chart Title
14House Research Department
09/29/09
Student Enrollment and Counting Students
• Public school enrollment in Minnesota peaked in1972 at the height of the baby boom.
• Public school enrollment fell sharply from 1973 to 1985 then increased at a moderate rate from 1985 to 2001.
• Statewide enrollment peaked in 2002 and has been slowing declining since that time.
• Enrollment changes are very different across the state.
• Most school districts have faced declining enrollment during the last 5 years.
• Minnesota has a few very large school districts and many very small school districts. 15House Research Department
Minnesota School Enrollment1960 to 2015
09/29/09
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
2023
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
School District Charter Nonpublic
Pu
pil
s
16House Research Department
School Enrollment by RegionFY 2009
09/29/09
#1 Northwest4%
#3 Northeast6%
#4 WestCentral4%
#5 Northcentral3%
#6 Southwest
6%
#7 EastCentral11%
#9 Southcentral4%
#10 Southeast9%
#11 Metro Area54%
Chart Title
17House Research Department
-8%
-6%
-4%
-2%
0%
2%
4%
6% Chart TitlePercent
School District 5 Year Enrollment Change by Region FY 2005 to
2009
09/29/09
Northwest Northeast WestCentral Southwest
EastCentral
SouthCentral Southeast
7 County
Metro
NorthCentral
18House Research Department
Percent of Students Enrolled by School Size Quintile FY 2009
09/29/09
Series10%
10%
20%
30%
40%
50%
60%
70%
80%
Series1
68 Largest Districts
68 Second Largest Districts
68 Middle Districts68 next
Smallest Districts68 Smallest
Districts
19House Research Department
09/29/09
State Aid For Schools
The percentage of state aid for school districts, as measured by aid plus levy (which excludes federal funds and other local funds such as fees for food service, etc.) had been fairly constant during the 1970s, 1980s and early 1990s.
The state aid began increasing in the late 1990s, and the 2001 overhaul of the state’s property tax system increased the state share of K-12 funding to nearly 90% of the total. Since that time, the state share has been steadily decreasing so that the state share for FY 2008 is now about 82% of total revenue.
20House Research Department
Percent of K-12 Aid & Levy From State Aid
For Fiscal Years 1984 to 2009
09/29/09
0%
20%
40%
60%
80%
100% Chart TitlePercent
21House Research Department
Total Revenue for EducationTotal Revenue $10.389 Billion FY
2009
09/29/09
General Education56.0%
Op. Referendum6.9%Special Programs
8.0%
Early Childhood1.2%
Facilities 9.4%
Federal5.9%
Fees8.3%
Other4.2%
Chart Title
22House Research Department
09/29/09
General Education Revenue
$6.539 Billion in FY 09General Education Revenue consists of several components including:•Basic Aid--$4,868 million•Extended Time--$62 million•Compensatory Revenue--$348 million•Limited English Proficiency (LEP) Funding--$41 million•Training and Experience Revenue--$1 million•Operating Sparsity Revenue--$23 million•Transportation Sparsity Revenue--$61 million•Operating Capital Revenue--$195 million•Equity Revenue--$94 million•Gifted and Talented Revenue--$11 million•Qcomp Revenue $66 million•Transition Revenue--$30 million•Pensions Adjustment Reduction– ($31 million)•Referendum Revenue--$722 million
23House Research Department
General Education Revenue byComponent $6.539 Billion FY
2009
09/29/09
Transition .5%
Basic 74.3%
Extended time .9%
Compensatory 5.3%
Op. Sparsity .4%
Transpo Sparsity .9%LEP .6%
Equity 1.4%
Op. Capital 3.0%T & E Revenue .1%
Referendum 11.0%
Gifted and Talented .2%
Qcomp 1.0%
Chart Title
24House Research Department
School District RevenuePer Student 1984 to 2009
09/29/09
84 86 88 90 92 94 96 98 0 2 4 6 80
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Total revenue /pupil CPI inflation adj /pupil
$ pe
r St
uden
t
25House Research Department
Revenue per Student LessBuilding Debt and Special Ed
Expenses
09/29/09
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 80
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Total Revenue per adm
Total Revenue Less Building Debt per adm
Total Rev less Debt and Spec Ed per adm
$ pe
r S
tude
nt
26House Research Department
Inflation Adjusted Revenue per Student
Less Building Debt and Spec Ed Expenses
09/29/09
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 080
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Inflation Adjusted Total Revenue per Student
Inflation Adjusted Total less Building Debt
Inflation Adjusted Total less Debt and Spec. Ed
$ pe
r S
tude
nt
27House Research Department
Special Education
• Minnesota’s school districts receive special education funding through a formula that partially reimburses the district’s costs.
• Federal funds are significant, but meet only a small portion of school’s special education costs.
• The “cross-subsidy” describes the gap between state funding and a district’s special education spending.
09/29/09 28House Research Department
Special Education Revenue and Expenses 1999-2013
09/29/09
99 0 1 2 3 4 5 6 7 8 9 10 11 12 13 -
500
1,000
1,500
2,000
Federal Aid State Aid Allocated Gen Ed Expenditures
$ T
hous
ands
29House Research Department
Minnesota ARRA Stimulus Allocations
• Stabilization Fund--$816 million ($500 million is for K-12 education and is a one-time offset against the state’s general education payments for FY 2010, $168 million is for higher education, $100 million is for human services programs and $38 million is for corrections programs)
• Special Education Grants--$205 million of which $190 million is for Part B grants
• Title 1 grants--$122 million of which $95 million is for direct grants to school districts
09/29/09 30House Research Department
09/29/09
Additional ResourcesAdditional information on Minnesota’s school finance system is available online. The following sources may be of help:
• Detailed description of Minnesota’s school finance systemhttp://www.house.leg.state.mn.us/hrd/topics.asp?topic=7#Finance_105
• Federal stimulus documents on MDE’s website
http://education.state.mn.us/MDE/About_MDE/News_Center/Fed_Stimulus_Update/index.html
• Fiscal worksheets prepared by the House fiscal analysis department http://www.house.leg.state.mn.us/fiscal/commpage.htm#K12
31House Research Department