Financing for K-12 targeted

A group charged with reshaping how Minnesota pays for its public education system on Tuesday recommended increasing equity among state school districts by moving away from districts' reliance on taxpayer-approved levies.

Faced with a model criticized for increasingly creating financial "haves and have nots," the group suggested taking some money from districts that approve levies to create a statewide pool. Districts that haven't been able to get levies approved would be taxed for their share.

"Currently, ZIP code matters in how much funding schools receive because it's reliant on property taxes through passage of referendums," Minnesota Education Commissioner Brenda Cassellius said after the group presented its plan.

Last year, a record 132 school districts held referendums, most asking for renewals or increases in their operating levies. In 2011, local school districts levied $707 million to supplement state aid, up from $223 million in 2002.

Under the plan, the state would not increase taxes overall, but some property owners would see their taxes go up while others would see theirs go down, said Tom Melcher, finance director for the state Department of Education. Any shift would depend on property values and current referendum levels.

The recommendations, which would cost an additional $633 million a year if fully implemented, will be forwarded to the Legislature and to Gov. Mark Dayton. Both will have to agree on changes to the state's funding formulas, a perennial issue at the Capitol. Any changes would take effect in the 2015 fiscal year.

Despite a DFL governor and DFL majorities in both houses, one lawmaker was quick to criticize the recommendations and the change in leadership.

The plan does not reflect the $2.4 billion the Legislature has in effect "borrowed" from education funding to help beat down years of budget deficits. The repayment will continue, but the rate will depend on the state's revenue forecast, due next week.

Among the key recommendations of the Education Finance Working Group, a coalition of school officials and education advocates:

• Place $300 per student from districts' voter-approved operating levies into a uniform general education funding formula, set at 2003 payment levels, adjusted for inflation.

• Simplify per-student funding formulas, taking into account the age, ability and socioeconomics of students in a district.

• Invest in all-day kindergarten for at-risk students across the state.

• Increase state funding for special education by $150 million to $200 million, to help districts make up for a funding gap that totals about $600 million.

• Shift special education and integration funding to reflect demographic changes in inner-ring suburbs and outstate population centers.

The boost in per-student aid also is a combination the rolled-over referendum dollars and other existing state funds, such as the safe-schools levy, gifted and talented revenue and other money that would become more flexible for district use.

In addition to increasing aid for special education, the group recommended replacing the current formula with one that is weighted depending on the concentration and needs of students in each district. The report also encouraged requiring districts where special- education students are open-enrolled to pay for 10 percent of the non-reimbursed cost of their education services, as a way to increase accountability and efficiency.

Dayton's spokeswoman, Katharine Tinucci, said the governor had not yet reviewed the recommendations. She said, however, that Dayton is both keen on increasing education funding and aware of continuing budgetary uncertainties.

The most aggressive adoption plan would create a state funding increase of about $101.8 million, which is adjusted to reflect the state's current payment practice, onto the current $14.4 billion two-year budget.

Some members of the group acknowledged some difficulty with the concept that some of the communities facing tax increases will not receive additional benefits.

"You try to create win-wins, but sometimes you're going to have some win-loss," said Ric Dressen, superintendent of Edina schools and a task force member.

He said he joined the near-unanimous vote to approve the recommendations, but said the increase in taxes with no increase in benefits among some school districts is a problem the Legislature will have to tackle.

It was less of an issue for task force member Mary Cecconi, executive director of Minnesota Parents United for Public Schools.

"You don't build a road by yourself, but you utilize a road. If you think schools only serve your child's need, you're forgetting the most important need for schools, which is to educate kids so they can be productive, citizens, who hold jobs and govern themselves."