School funding comes from many sources

Published 5:57 pm Saturday, October 26, 2013

Column: Guest Column, Lori Volz

Albert Lea Area Schools will be seeking a renewal of its levy on Nov. 5. Prior to the election, we wish to provide the community some background on how schools are funded.

Lori Volz

Lori Volz

The general fund is the major fund that schools have to pay for the cost associated with educating students. The revenue for this fund includes state aid, federal aid, local levies and miscellaneous other sources. Enrollment plays a significant role in education funding as we are funded based upon the number of students that we serve.

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Over the past four years, Albert Lea Area Schools has benefited from increased enrollment by 81 students. In 2012, Albert Lea spent an average of $11,569.42 per student.

K-12 public education is dependent on the state of Minnesota for its revenue authority. For Independent School District 241, nearly 80 percent of our total general fund revenues come in the form of state aid. Only 13 percent comes from local taxes. Federal aids and other miscellaneous make up the remaining 7 percent.

The local school taxes for this upcoming 2014 tax year will go down due to property tax relief approved by the Legislature.

This property tax relief is directly tied to the operating referendum and location equity aid. For example the taxes on a $100,000 home will be reduced by $43 in 2014. If the operating referendum is renewed by the taxpayers, the local property tax will stay the same in 2015 as in 2014 — therefore at the same lower level of tax.

Recently, there has been quite a bit of media coverage regarding the state’s property tax shift and state aid metering for public schools.

While the state is obligated to fund public schools based on the number of students they serve, the Legislature has the ability to hold back aid payments for an entire year from when they are earned.

This is a way for the state to balance their budget but causes hardship for the local public school districts and the result is that cash flow shortages occur. In 2012, Albert Lea Area Schools borrowed $6 million to pay its bills. This was necessary even though the district had a healthy fund balance as well as a balanced budget with revenues equaling expenditures.

Recently, the state improved the state aid metering and tax shift so that local school districts are now receiving their aid entitlements in a more timely fashion. Albert Lea Area Schools will no longer have to borrow cash in 2013 as a result.

Another funding change coming for next year’s 2014-15 fiscal year is the pupil weighting. In the past kindergarten students received a weighting value (for funding purposes) of 0.612 even though in Albert Lea they were being serviced in an all-day, everyday kindergarten program.

Starting in 2014-15 kindergarten will be given a weighting of 1.0 which means the district will receive more funding for a kindergarten student than in the past.

However, the weights for the other grade levels are reducing and will offset the improved kindergarten weighting to some extent.

While the Legislature did adjust the funding formula rates to neutralize the reduced weighting of grades 1-12, future formula enhancements will be negatively impacted due to the reduced weighting.


New student weights

Category 2014-15 2013-14

Prekindergarten disabled 1.0 1.25

Part-time kindergarten 0.55 0.612

All-day kindergarten 1.0 0.612

Grades 1-3 1.0 1.115

Grades 4-6 1.0 1.06

Grades 7-12 1.2 1.3

Source: Minnesota Department of Education


Explanation: School funding by the state is done on a per-pupil basis. However, one student does not equal one set dollar figure. That’s because older students cost more to educate than younger ones. The weights determine how much school districts receives.

Albert Lea school administrators say the reduction across every grade level has a significant financial impact on the district.


Lori Volz is the finance director for Albert Lea Area Schools.