Fighting vast disparities in our schools' funding

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, among public school districts across Minnesota in graduation rates, achievement levels, early childhood programs, dual credit (high school and college) course offerings, discipline rates and diversity of teachers.

One measure of equity that has received less attention is the disparity between school districts in the local property taxes that must be approved by voters through referendums.

Information supplied by Robert W. Baird & Co. in late 2017 demonstrates the inequity in funding of public school referendums in Minnesota. Baird compared the impact of 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 (with a median of $202.35). That one property owner with the same value property would have to pay nearly 20 times more in tax for the same per-student bond should outrage taxpayers in this state. The same type of difference exists across all classes of property, including commercial and industrial, ag homestead and non-ag homestead (bare agricultural land).

Differences in costs 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 — still a difference of 193 percent from high to low.

The major cause of the 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 than property-poor districts. 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.

The present method of funding also creates problems for some school districts when taxpayers see what the costs for school referendums would be in adjoining districts. Where a Worthington bond would cost $279 per taxpayer, comparable neighbors would pay $65 in Fulda, $128 in Adrian and $68 in Ellsworth.

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 enjoy the same outcomes.

The solution to the inequity in funding public schools lies with the Minnesota Legislature. It alone determines 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.

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.