k-12 education finance presentation k-12 education finance division minnesota house of...

K-12 Education Finance Presentation

K-12 Education Finance Division Minnesota House of Representatives

Highlights of ’08 SessionFor FY09:• Added $51 per pupil unit to each district’s

general education revenue• Authorized one-time fund transfer of up to

$51 per pupil unit from reserved for operating capital account to general fund balance

• Increased maximum lease levy from $100 to $150 per pupil

• Authorized levy to replace funds lost due to Local Collaborative Time Study audit

5/28/08 Minnesota House of Representatives 2

Highlights of ’08 Session

For FY 2010 and later:• Removed general education aid offset of

Permanent School Fund (PSF) money– provides school districts with added $30

million annually, roughly $36 per resident student (about $30 per AMCPU).



Education Finance Reform Process & Background

Governor Pawlenty convened a task force in the fall of 2003 to examine Minnesota’s education funding system. The task force developed school finance data based on professional judgment panels. The task force issued an initial report in the summer of 2004 and then disbanded.

P.S. Minnesota was formed to carry on the work of the task force. P.S. Minnesota is non-partisan coalition of Minnesota education and parent groups united to advocate for adequate and sustainable public education funding. P.S. Minnesota convened a series of meetings, and working with a consultant, interested school groups, and citizens, developed an education funding framework based on nine characteristics.

The 2007 Legislature established a school funding task force consisting of the Commissioner of Education and House and Senate members to further study Minnesota’s school finance system and build on the recommendations of P.S. Minnesota. Even though the funding for the task force was vetoed by the Governor, the school funding task force held several meetings but never officially adopted a report. The legislative co-chairs of the task force, Representative Mindy Greiling and Senator Terri Bonhoff, introduced HF 4178/SF 3828 toward the end of the 2008 session, reflecting their views of how the P.S. Minnesota funding characteristics could be implemented.


HF 4178 Goals

• Adequate funding for all public school students• Equitable funding formulas• More fair funding system• Simplified funding system• Scalable to allow for phase-in over time


HF 4178 Characteristics

• Sets basic per pupil formula high enough to cover districts’ basic instructional needs while having other component formulas match specific additional needs

• Fully funds state’s share of special education costs

• Increases options for school district facility needs• Restores equalization in school property tax

system

A Closer Look at HF 4178

Funding Formula Details



All Students Counted as 1.0

• All students – including kindergarteners – count as 1.0 pupil.

• Ends current pupil weighting by grade level.• Continues to fund school districts and charter

schools based on number of students served, not on number of pupils resident to the district.


Basic Formula Allowance Increased

• Increases basic formula allowance from $5,124 per adjusted marginal cost pupil unit to $7,500 per adjusted pupil.

• Indexes basic formula allowance to rate of inflation, as measured by the GDP implicit price deflator for state and local services.


Compensatory Revenue• Provides additional funding to schools that serve students from low socioeconomic backgrounds.• Expands with all students eligible for free or

reduced meals generating an added $2,500 (33% of the formula allowance).

• Concentration factor increases maximum compensatory revenue to 40% of the formula allowance.

• Concentration calculated on a district level, not a site level.


Limited English Proficiency Revenue Expanded

• Links LEP funding amounts to the basic formula allowance.

• Sets new LEP formula equal to the total uncapped LEP count times 20% of the formula allowance.

• Eliminates current LEP funding limit of 5 years for any one student.


New Declining Revenue Formula

• Creates new component of general education revenue called “declining enrollment revenue.”

• Revenue equals the greater of zero or formula allowance times the difference between the three-year average enrollment and the current year enrollment.

• Under current law, a portion of a single year’s loss in enrollment is built into each district’s pupil count.


Location Equity Index Revenue Established

• Location Equity Index (LEI) increases funding for school districts in counties with above-average cost of living as measured through wage and housing data.

• Sets the formula equal to 50% of the basic formula allowance times the greater of 1.0 or the county index for that school district.


Sparsity Revenue Modified

• Goes to small, geographically isolated school districts.

• Lowers the minimum sparsity distance from 19 to 15 miles.

• Keeps requirements that qualifying schools both serve a small number of students and are a minimum distance from the next nearest school.

Innovation Revenue Established

• 1.5% basic revenue reserve created• To fund research-based practices that

improve student academic performance• Districts not making adequate progress file

plan with MDE commissioner for use of revenue


Other Reserves

• 1% for Gifted & Talented programs.• 0.5% for added career & technical programs

(in addition to the current levy).• Maintains existing reserves for basic skills

programs; operating capital; staff development.



Streamlines General Education Revenue

Eliminates the following revenue components:• T&E (training and experience);• Equity;• Transition;• Pension offset;• Gifted & Talented;• Q-Comp.


Referendum Revenue Offset Created

• Offsets $500 per pupil of each district’s referendum revenue and adds $500 per pupil to each district’s general education revenue.


Special Education Revenue

• Removes statewide special education basic revenue cap so each school district receives from the state the full formula amount of 68% of its eligible special education costs.

• Removes statewide cap on excess cost revenue.

Pupil Transportation Needs

• Creates new hazardous pupil transportation aid– Districts determine hazardous conditions– Total aid limited to not more than 20% of

district’s to and from transportation costs• State aid of 5% of district’s total transportation

costs for bus purchase.


School Facility Needs

• Authorizes every school board to levy for the cost of deferred maintenance needs (now only the very largest school districts can do so).

• Increases debt service equalization aid. • Provides an agricultural school bond credit to

lessen the impact of school building projects on agricultural lands.


Property Tax Reductions

• Enhanced equalization levels established for the major school funding formulas

• Equalizing factors indexed to the statewide growth in tax base.

• School taxes reduced by eliminating levies for operating capital, equity, transition, and Qcomp, by enhancing equalization levels, and by offsetting $500 per pupil of referendum revenue.


General Education Components

Current Law vs. HF 4178Component Current Law(in thousands)

HF 4178(in thousands)

Revenue Increase

(in thousands)

Basic Revenue 4,886,785 6,153,306 1,266,521

Extended Time Revenue 55,634 89,886 34,232

Compensatory Revenue 346,726 661,046 314,320

LEP Revenue 40,304 80,316 40,012

T&E Revenue 1,767 0 -1,7670

LEI Revenue 0 155,962 155,962

Operating Sparsity 22,596 33,018 10,422

Transportation Sparsity 60,963 76,538 15,575

Operating Capital 194,812 189,769 -5,043

Equity 94,950 0 -94,450

Referendum Offset Revenue 0 410,220 410,220

Gifted and Talented 11,445 0 -11,445

Gifted and Talented Reserve 0 $61,533

Declining Enrollment Revenue 0 73,450 73,450

Transition Revenue 29,745 0 -29,745

Pension Adjustment -30,692 0 30,692

Referendum Revenue 724,239 313,904 -410,338

Q-Comp Revenue 92,979 0 -92,979


Online Resources

HF 4178, the proposed amendments, and a district-by-district spreadsheet of proposed revenue by school district are available online by searching House File 4178 on the Minnesota House of Representatives website’s home page or by going directly to the following webpage:

http://www.house.leg.state.mn.us/bills/billnum.asp?Billnumber=hf4178&ls_year=85&session_year=2007&session_number=0

Detailed descriptions of Minnesota’s current school finance system can be found here:

http://www.house.leg.state.mn.us/hrd/issinfo/ed_k12.htm#FIN

and here:

http://www.house.leg.state.mn.us/fiscal/files/07fined.pdf








http://www.house.leg.state.mn.us/hrd/issinfo/ed_k12.htm#FIN

http://www.house.leg.state.mn.us/fiscal/files/07fined.pdf

k-12 education finance presentation k-12 education finance division minnesota house of...

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