School officials say funding system limits their options

Published 12:00 am Monday, January 7, 2002

School funding decisions are often mired in a maze of state policies and programs, leaving local school officials governed by uncertainty.

Monday, January 07, 2002

School funding decisions are often mired in a maze of state policies and programs, leaving local school officials governed by uncertainty. There is little local control over most school revenue sources and many strings attached to that money when it comes.

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Aside from asking voters directly for more money, local school districts have few options. And when voters say no, those options narrow even further.

So the failure of November’s referendum in the Albert Lea School District is merely one kind of bad news in a situation with many complications. Budgeting for public schools in Minnesota is always a difficult process, whether a district has to deal with a failed referendum or not, officials say.

One of the biggest factors is how the state apportions its contributions to a school district’s general fund, because most funding comes from state sources. Just about 19 percent of the revenue in both the 2000-2001 and 2001-2002 school years came from local property taxes. It will be significantly less than half of that percentage in the 2002-2003 school year and beyond.

Local school boards will still have some responsibility for setting levies in the future, but not as much as previously.

&uot;There will be little local control [over property taxes] from this point on,&uot; said Stotts.

Another major problem is the shrinking population of students.

&uot;Declining enrollment is the biggest problem for this district,&uot; said Stotts. Revenue from the state is tied directly to enrollment. Fewer kids means fewer dollars from state sources.

Stotts graduated from the Albert Lea High School in 1980. He remembers when graduating classes were larger than 500 students. Once upon a time, the district had nine elementary schools, and two junior highs. According to figures provided by Stotts, in the 1970s the district had nearly 7,000 students. Today that number is down to less than 4,000.

An especially serious complication in Minnesota results from what is called &uot;compensatory revenue.&uot; School districts receive a certain amount of extra money based on the number of students who take part in the free and reduced-price lunch programs. The theory is that these schools have a higher need because so many families in the district live at or below the poverty line.

The program creates an imbalance in state funding that dumps more money into Minneapolis and St. Paul than it provides to most school districts in Greater Minnesota, said State Rep. Dan Dorman, R-Albert Lea.

Dorman doesn’t deny that it costs more to educate a child raised in poverty. But it bothers him that school districts like Albert Lea aren’t treated fairly when those extra funds get concentrated in specific school districts.

&uot;Compensatory revenue is not a flat fee. The basic story is a poor child in Albert Lea gets less than a poor child in Minneapolis,&uot; he said.

The Albert Lea School District receives some money from the program, but it only amounts to 5 percent of the general fund. In the Minneapolis School District, it amounts to nearly 33 percent. And this gives them room to add programming that Albert Lea can’t afford, he added.

Trying to make the system treat schools more equitably is a struggle, Dorman said. And victories are few and far between so far. A few legislators have raised the issue every session, but the only real success so far was getting schools to document for legislators how they spend the extra money they receive through this kind of aid, he said.

One last problem relates to the community on which a school district depends for levy revenue. Not all communities are at the same level economically.

&uot;Referendum levies are the biggest kind of funding disparity,&uot; Stotts said. And Dorman agrees, for the most part. It costs more for taxpayers in a school district like Albert Lea to provide $1 million than it does in a richer suburban Twin Cities districts. Property there has a higher valuation and more property is taxable, said both Stotts and Dorman.

The state provides some help with this, so levies don’t end up costing some communities more than others, said Dorman. But it doesn’t always equalize finances the way it was designed to. And some communities can just afford to spend more, no matter what the state tries to do to make things more fair for poorer districts, he said.