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Education advocates watch final deal-making with growing disappointment

ST. PAUL -- Educators had high hopes this would be the year the Minnesota Legislature would begin to address what many consider to be longstanding unfairness in the way public schools are funded.

ST. PAUL -- Educators had high hopes this would be the year the Minnesota Legislature would begin to address what many consider to be longstanding unfairness in the way public schools are funded.

Yet, despite lawmakers having a $900 million budget surplus to work with, most education advocates are watching the final legislative deal-making with growing disappointment.

The final education bill is still being decided, but proposals now on the table do little to address what school leaders say are funding inequities in the areas of special education costs and residential property taxes.

“Our members are surprised there is not more interest in helping them address their funding shortfalls,” said Scott Croonquist, executive director of the Association of Metropolitan School Districts. He noted that Twin Cities metro districts plan to cut $50 million from their spending plans for the next school year, including more than 100 positions.

Confronted with that critique, state lawmakers note that last year they added $525 million in education spending to the current two-year budget. Now, in a nonbudget year, lawmakers are focusing on addressing a growing teacher shortage, diversifying the educator workforce and expanding access to preschool.

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There are a few exceptions, including $7.7 million of new money in the Republican-led House plan that gives rural schools a bump in funding to help communities with small property-tax bases. Even that money will come at a cost to local taxpayers, who would have to kick in a portion after the first year.

Rep. Jenifer Loon, R-Eden Prairie, chair of the House Education Finance Committee, said increasing rural districts’ equity aid would help those districts in their struggles with staffing.

“What we are finding is that the teacher shortage and ability to attract candidates is more acute in rural areas,” Loon said.

She added that school boards have to allow for community input before deciding to raise local taxes. “We give local citizens a voice in the decision,” Loon said.

Fred Nolan, executive director of the Minnesota Rural Education Association, said equity aid was not his organization’s top priority this year, but, “as one superintendent told me, any little bit helps.”

Nolan said he remains hopeful that lawmakers will help farmers afford the cost of school capital levies and will expand funding for teacher training and evaluation, which are key priorities for rural schools.

Special education

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Besides the perennial request to increase funding for districts’ day-to-day operations, school leaders have long pushed lawmakers to address two funding systems they believe are unfair -  how special education services are paid for and how residential homeowners pay more school taxes in districts with little business or industry.

Each year, Minnesota school districts spend about $600 million on special-education services that are supposed to be funded by the state and federal government. This “cross-subsidy” pulls dollars meant for the classroom and directs them to special-education services state and federal laws require.

About 15 percent of Minnesota students have special-education needs. As the cost of serving these students continues to grow, school leaders have intensified their pressure on lawmakers to provide more state funding to close the gap.

Croonquist says special education has “a tremendous impact on district budgets” and that beginning to address the shortfall would “provide the most relief to the broadest number of districts.”

Property taxes

Another state education funding system that many district leaders would like to change is the way Minnesota calculates local school taxes.

Critics like Superintendent Dave Webb of South St. Paul say communities with lots of homes and few businesses are left at a disadvantage.

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Property taxes for school operating levies are calculated by dollars per student. In communities without a strong corporate tax base, residential property owners have to pay more to raise the same amount per pupil. That means residents in Webb’s district pay almost three times what a Minneapolis homeowner pays to raise the same amount of money per student. State levy equalization aid picks up some of the slack, but Webb says the amount is not tied to inflation and is too little.

“That’s not fair and that’s not equal,” Webb said. “In a state where we want to support all kids equally, we are not.”

Webb helped lead a coalition asking the Legislature for $44 million in new funding to bring more fairness to the existing levy equalization system. Lawmakers acknowledged the unfairness, but essentially told Webb’s group there wasn’t money available to address it this year.

Common ground

Rep. Loon and her counterpart Sen. Chuck Wiger, DFL-Maplewood, who chairs the Senate Education committee, agree more can be done to improve how Minnesota funds public schools.

But the Republican and Democrat committee chairs, who will play lead roles in crafting the final education bill, say they’ve also found a lot to agree on this legislative session.

“Do I wish there were more money? I certainly do,” Wiger said. “There are a number of common proposals we share with the House. I’m focused on those.”

Members of the two parties appear to agree on new spending to attract a more diverse teaching force, make college more affordable for lower-income students, and provide better access to high-quality early education for the children most at risk.

Loon also noted there is bipartisan support to reduce special education paperwork required by the state by 50 percent over the next two years. The paperwork is a top complaint of school leaders because of the time it requires, she said.

The big picture

To counter school lobbyists’ disappointment about this year’s anticipated meager new school funding, lawmakers are quick to point out that last year was a banner year for education spending.

After Gov. Mark Dayton’s veto of a school spending bill he said was too small, the Legislature approved $525 million in new money. That brings state education spending to $17.2 billion for the current two-year budget.

Adjusted for inflation, Minnesota’s annual spending on public schools is close to what it was both in 2001 and before the Great Recession of 2008. The state’s per-student spending is close to the $10,700 per-student national average, according to a 2015 U.S. Census report.

School funding through local property taxes is also on the rise and will reach $2.6 billion in the coming fiscal year. That’s a 21 percent increase over the past five years.

Mark Haveman, executive director of the tax watchdog the Minnesota Center for Fiscal Excellence, says that as lawmakers and school leaders debate the best way to fund education they should look more closely at schools’ inflationary costs.

“We need to pay attention to the cost side as well as the revenue-raising side,” Haveman said. “School districts have some control over their inflation through the collective-bargaining agreements they negotiate.”

School leaders say those contracts are key to attracting high-quality educators. Most of the deals with teachers unions contain regular pay raises as educators gain experience and education.

Haveman argues the costs of those deals are increasingly unsustainable and state leaders should look at alternative pay models.

“Alternative compensation is going to need to be part of the conversation when we look at the sustainability of state education funding,” he said.

Related Topics: EDUCATION
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