Minnesota School Finance .mn.us

Minnesota School Finance: A Guide for Legislators

About this Publication

This guidebook explains how public elementary and secondary schools are funded in Minnesota.

By Tim Strom, Legislative Analyst November 2019

Contents

Executive Summary................................................................................................. 1 Introduction ............................................................................................................ 2 School Finance Terminology ................................................................................. 11 Property Tax System Terminology ........................................................................ 18 Counting Students................................................................................................. 20 General Education Revenue.................................................................................. 22 School Transportation........................................................................................... 43 Capital Finance...................................................................................................... 44 Special Education .................................................................................................. 57 American Indian Programs.................................................................................... 61 Community, Early Childhood, and Adult Education ............................................. 64 Cooperative Programs .......................................................................................... 76 Dual Enrollment Programs.................................................................................... 79 Charter Schools ..................................................................................................... 82 School Desegregation and Integration ................................................................. 85 Career and Technical Education ........................................................................... 90 State Academies.................................................................................................... 93 Miscellaneous Funds for Education ...................................................................... 96 Income Tax Deductions and Credits ................................................................... 106 Taconite Revenue for School Districts ................................................................ 108 Tax Relief Aids and Aids in Lieu of Taxes ............................................................ 114 Teacher Retirement ............................................................................................ 117 Postemployment Benefits .................................................................................. 121 School District Accounting .................................................................................. 123 Appendix ............................................................................................................. 132

This publication was prepared by Tim Strom, a legislative analyst specializing in the area of K-12 education finance. Questions can be addressed to Tim at 651-296-1886.

Minnesota House Research Department provides nonpartisan legislative, legal, and information services to the Minnesota House of Representatives. This document can be made available in alternative formats. house.mn/hrd | 651-296-6753 | 600 State Office Building | St. Paul, MN 55155

List of Tables

Table 1: Characteristics of Minnesota Independent School Districts, 20172018.................................................................................................................... 5

Table 2: Characteristics of Minnesota Charter Schools, 2017-2018....................... 6 Table 3: School Enrollment 1959-60 to 2022-23 by School Type ........................... 6 Table 4: Minnesota School Enrollment................................................................. 10 Table 5: General Education Equalizing Factor* .................................................... 12 Table 6: General Education Formula Increases 1989 to 2021 .............................. 13 Table 7: General Education Levy........................................................................... 14 Table 8: Education Acronyms ............................................................................... 16 Table 9: Enrollment Weights by Grade ................................................................. 21 Table 10: General Education Revenue Components Excluding Referendum

Revenue............................................................................................................ 22 Table 11: Basic Education Formula Allowances.................................................... 23 Table 12: Compensatory Revenue Characteristics for Selected School

Buildings for the 2019-20 School Year ............................................................. 27 Table 13: English Learner Revenue Characteristics for Selected School

Districts 2019-20 School Year .......................................................................... 28 Table 14: Equity Revenue Percentiles................................................................... 32 Table 15: Pension Adjustment Aid Entitlement.................................................... 34 Table 16: Characteristics of Largest and Smallest School Districts....................... 35 Table 17: Revenue Reserved for Class Size Reduction ......................................... 36 Table 18: General Education Program Aid Entitlement and Levy ........................ 38 Table 19: Referendum Revenue Allowances and Equalizing Factors ................... 41 Table 20: Referendum Revenue Amounts............................................................ 41 Table 21: Permanent School Fund Endowment and Income ............................... 42 Table 22: Debt Service Equalizing Factors ............................................................ 45 Table 23: Debt Service Equalization Aid Calculation for a Hypothetical

District .............................................................................................................. 46 Table 24: Total Statewide Debt Service Amounts; Regular and Enhanced

Equalization Aid................................................................................................ 47 Table 25: School Building Bond Agricultural Credit .............................................. 48 Table 26: Capital Project Levy ............................................................................... 49 Table 27: Maximum Effort Bond Sales.................................................................. 51 Table 28: Long-Term Facilities Maintenance Revenue; Appropriation and

Levy .................................................................................................................. 53 Table 29: Building Lease Levy Amounts................................................................ 54 Table 30: Building Lease Levy Restrictions ........................................................... 55 Table 31: Telecommunications/Internet Access Aid ............................................ 56

Table 32: Special Education Unduplicated Child Count by Disability Category (All Ages) as of December 1, 2018 ................................................................... 57

Table 33: Special Education Appropriations ......................................................... 60 Table 34: Tribal Contract School Estimated Enrollment and Initial Estimated

Aid Entitlement for FY 20 ................................................................................. 62 Table 35: Appropriations for American Indian Programs ..................................... 63 Table 36: Community Education Revenue............................................................ 65 Table 37: Programs for Adults with Disabilities.................................................... 65 Table 38: Early Childhood Family Education Revenue.......................................... 67 Table 39: Early Childhood Home-visiting Program ............................................... 67 Table 40: School Readiness Aid ............................................................................ 69 Table 41: Early Learning Scholarship Appropriations ........................................... 71 Table 42: Developmental Screening Aid ............................................................... 72 Table 43: Head Start Revenue .............................................................................. 72 Table 44: School-age Care Program...................................................................... 73 Table 45: Adult Basic Education Programs ........................................................... 75 Table 46: Consolidation Transition Revenue ........................................................ 77 Table 47: Concurrent Enrollment Aid ................................................................... 81 Table 48: Charter School General Education, Special Education, and Building

Lease Aid .......................................................................................................... 83 Table 49: Achievement and Integration Maximum Revenue for Fiscal Year

2020.................................................................................................................. 86 Table 50: Integration Revenue Allowances Per Pupil Fiscal Years 2001 to

2013.................................................................................................................. 86 Table 51: Estimated Appropriations and Levies for Integration Activities

Based on 100% Aid Entitlement; Amounts for Aid Fiscal Year ........................ 87 Table 52: Appropriations for Other Integration Funding Programs ..................... 88 Table 53: Funding Formulas for Career and Technical Revenue .......................... 90 Table 54: Career and Technical Revenue.............................................................. 91 Table 55: Appropriations for ServeMinnesota and the Minnesota Reading

Corps ................................................................................................................ 92 Table 56: Direct Appropriations for the Minnesota State Academies for the

Deaf and Blind .................................................................................................. 93 Table 57: Minnesota Center for Arts Education ................................................... 95 Table 58: Q-comp Revenue................................................................................... 96 Table 59: Literacy Incentive Aid ............................................................................ 97 Table 60: Abatement Aid and Levy ....................................................................... 98 Table 61: Nonpublic School Student Aid .............................................................. 99 Table 62: Shared Time Programs ........................................................................ 100 Table 63: Nonpublic Pupil Transportation .......................................................... 101 Table 64: State and Federal Funds for School Nutrition Programs .................... 102

Table 65: Safe Schools Levy ................................................................................ 103 Table 66: Miscellaneous Levy Amounts.............................................................. 105 Table 67: Estimated Cost to State in Foregone Tax Revenue ............................. 107 Table 68: Estimated Taconite Revenue Used to Reduce School District Levies . 109 Table 69: Estimated Taconite Revenue Used to Equalize Referendum Levies... 110 Table 70: Taconite Revenue for Building Maintenance: 4.0 Cents per Ton ....... 110 Table 71: Iron Range School Account ................................................................. 111 Table 72: Iron Range School Consolidation and Cooperatively Operated

School Account Distributions Awarded to School Districts ........................... 112 Table 73: Taconite Debt Service Assistance Provided by Enacted Laws ............ 113 Table 74: School District Share of All Property Tax Credits Estimated for

Taxes Payable in 2018 (Fiscal Year 2019)....................................................... 116 Table 75: Membership Counts, Fund Assets, and Liabilities by Retirement

Plan................................................................................................................. 118 Table 76: Employee and Employer Contribution Rates (Fiscal Years) ................ 118

Table 77: Social Security and Medicare Employer Contribution Rates .............. 120 Table 78: Postemployment Benefit Levies ......................................................... 122 Table 79: School Funds ....................................................................................... 123 Table 80: Aid Payment Percentage ..................................................................... 125 Table 81: Example of Appropriation Payments .................................................. 126 Table 82: Relationship Among the Years ............................................................ 127 Table 83: Metered Payments.............................................................................. 129

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