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Column: Fighting vast disparities in our schools' funding

Editor's note: The following column was originally published March 2 in the Star Tribune. WORTHINGTON -- Minnesota has a very complex school funding system that creates inequities between school districts and frustrations between the school and t...

Editor’s note: The following column was originally published March 2 in the Star Tribune.

 

WORTHINGTON - Minnesota has a very complex school funding system that creates inequities between school districts and frustrations between the school and taxpayers. These inequities can create differences or gaps between public school districts across Minnesota. A few are graduation rates, achievement gaps, early childhood programs, dual credit (high school and college) course offerings, discipline gaps and shortages/gaps of diverse teachers. One measure of equity that has received less attention is the disparity of local property taxes between school districts that must be approved by voters through a referendum. An approval through a public vote is needed to provide either general operating funds to pay for things such as additional teachers or educational programming, or capital funds (bonds) to build new schools or renovate/repair/upgrade existing schools.

 

Information supplied by Robert W Baird & Co. in late 2017 demonstrates the inequity in funding of public school referenda in Minnesota. Baird compared a $15,000 per student 20-year capital bond across the 332 Minnesota public school districts. The cost to a residential homestead with a taxable valuation of $150,000 varied from a low of $24.34 to a high of $483.54, a median of $202.35 and an average of $213.16 - a difference of $460 on a residence with the same valuation. That one property owner with the same value property would pay nearly 20 times more in tax for the same per student bond should outrage most taxpayers in the state. The same difference exists across all classes of property including commercial and industrial, ag homestead and non-ag homestead (bare ag land).

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Admittedly, there are differences in costs because of project size (a school for 900 students will cost less on a per student basis than a school for 200) and location (a school in a metro area will cost more on a per student basis than in a rural area), but these differences are difficult if not impossible to quantify with existing publicly available data.

Differences in cost for an operating levy also exist but are smaller with the cost of a $1,000 per pupil levy on a $150,000 residential homestead varying from $105.98 to $310.57 with an average of $267.26, a difference of 293 percent from high to low.

The major cause of the tax disparity is the value of taxable property in each school district.  Some assume that this is a rural vs urban situation, but it is not. Property-rich districts - those having a large commercial/industrial or bare ag land base per pupil - have a much lower tax rate then property poor districts where the opposite is true. Some rural districts that have a large ag land base and relatively few students have a low cost for a bond but a high cost for an operating levy because bare ag land is excluded from funding operating levies. For example, the taxpayers in the Chokio-Alberta district would pay $45 a year for a bond that the taxpayers in Fridley would pay $436 for. For an operating levy that Hopkins would pay $112 for, Chokio-Alberta would pay $286.  

The present method of funding also creates problems for some districts when taxpayers see what the costs for school referendums would be in adjoining school districts. Some examples:  For taxes on a bond that would cost a Houston district taxpayer $400 neighboring district Winona would cost $168, Caledonia $214 and Spring Grove $250. Where Robbinsdale would cost $271 Hopkins would cost $115, Wayzata $154, and Columbia Heights $382. Where a Worthington bond would cost $279 neighboring Fulda would cost $65, Adrian $128 and Ellsworth $68. Is it any wonder why some districts have difficulty passing referendums while it is easy in other districts?

A large factor that plays into taxpayer’s willingness to support local funding through property taxes is the average income in school districts across the state. A 2015 report showed that the average income in school districts ranged from over $100,000 per household to under $22,000.  To support the same learning opportunities takes a far greater share of income from lower income families than from higher income families yet all are expected to have schools whose students have the same outcome. Farmers have major problems supporting taxes for capital funding in times of low incomes because of the cyclical nature of farm prices.

The solution to the inequity in funding public schools lies with the Minnesota legislature because they alone determine how public schools are funded. In 2014, the report and recommendations of the School Facilities Financing Working Group was issued but largely ignored by the legislature. This report outlined four core principles:

  1. Funding should be adequate, equitable and sustainable.
  2. All districts should have access to comparable funding for comparable needs based on uniform procedures and eligibility criteria.
  3. Local school districts should take the lead in determining facilities project needs, scope, and design.
  4. Funding formulas and administrative procedures should be as simple as possible, so as to minimize administrative burdens / paperwork and maximize local control, while providing accountability.

 
A review and action on the recommendations contained in this report would be an excellent place to start.

Related Topics: EDUCATION
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