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As Minnesota debates a last-minute funding boost, some historical context for state-funding of schools

Minnesota’s education funding has recovered to pre-recession levels, due to regular, small increases.

As school districts across the state threaten budget cuts to deal with projected deficits, how Minnesota funds public education has again come up as a subject of debate at the State Capitol.

In the last weeks of session, Gov. Mark Dayton has been calling for using part of the state’s $329 million budget surplus to fund a $138 million one-time allocation that would give districts $126 per student.

That money, Dayton says, would help districts facing layoffs and help make up for funding he says has eroded over time. But Dayton’s ask is far from certain to pass: opponents of the idea cite an increase in school funding last year or say a one-time solution won’t fix a long-term problem.

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Minnesota isn’t the only state where education funding is a hot topic right now. Teachers in Arizona, Colorado, Kentucky, Oklahoma and West Virginia have been protesting what they call insufficient education dollars.

Education spending nationwide took a hit during the Great Recession. In many states, including some of the states where the protests have taken place, it hasn’t recovered. Nationally, nearly half of U.S. states saw inflation-adjusted per-pupil spending by school districts at lower levels in 2015 than in 2008, according to data from the U.S. Census Bureau that show current spending by school districts (all figures in this story are shown in 2018 dollars, using the Bureau of Labor Statistics’ consumer price index inflation calculator).

That’s not the case in Minnesota. Here’s how the state compares to others when it comes to per-pupil spending over time.

A look at Minnesota

Generally speaking, Minnesota ranks near the middle of the pack for per-pupil spending among U.S. states.

Minnesota’s inflation-adjusted per-pupil spending has risen over time, but dipped during the recession like other states’. Stimulus funds from the American Recovery and Reinvestment Act, passed in 2009, prevented spending from dropping farther during the recession, Melcher said. A bump in spending in 2009 appears to be largely due to an increase in employee benefits.

Inflation-adjusted per-pupil spending, Minnesota and United States, 2001-2015
Nearly half of U.S. states have not seen education spending recover to pre-recession levels, but Minnesota's has recovered at a faster clip than districts average nationally. Before the recession, in 2008, Minnesota districts spent $11,864 per student. In 2015, the most recent data available, they spent $12,666. Note: Data shown in 2018 dollars, adjusted using the U.S. Bureau of Labor Statistics' CPI Inflation Calculator.
Source: U.S. Census Public Education Finances

During the recession, Minnesota didn’t cut the amount districts received per student through the state’s education funding formula, said Tom Melcher, director of school finance at the Minnesota Department of Education, but it increased them by either none or very little in the recession years.

“(District) spending was flat, or maybe growing a little but it wasn’t keeping up with inflation, so that creates budget difficulties for school districts. Typically, their costs are growing,” Melcher said.

Since then, Minnesota’s school spending trajectory tracked the country’s as a whole in regaining ground lost during the recession, except that the state saw slightly larger gains. With more recent numbers, the line for Minnesota would show further increases, since Minnesota’s state funding formula has increased baseline per-pupil allocations to districts by 2 percent each year since 2015.

Inflation-adjusted per-pupil spending by select category in Minnesota, 2001-2015
Note: Data shown in 2018 dollars, adjusted using the U.S. Bureau of Labor Statistics' CPI Inflation Calculator.
Source: U.S. Census Public Education Finances

“The pattern is it went down and now it’s going back up,” Melcher said.

More granular data show per-pupil spending on employee salaries and wages, benefits, teacher’s salaries and wages and support services in Minnesota were above their 2008 levels in 2015.

Looking elsewhere

While Minnesota districts’ spending has come back after it lost ground during the recession, many states’, including Oklahoma and Arizona, have not.

In Oklahoma, inflation-adjusted per-pupil student spending declined by 5 percent between 2008 and 2015. Oklahoma spent $8,567 in per student in 2015, earning it a ranking of 48th among U.S. states and the District of Columbia.

Declining oil revenue and income tax cuts both figure into declining education spending here, according to Governing. In Oklahoma, one in five districts has cut classes to four days a week, and educators’ minimum base salaries haven’t increased in almost a decade. The state is offering emergency credentials to a record number of teachers to fill classrooms.

Arizona schools have long had less per-pupil resources than other states, ranking near the bottom in the early 2000s. In 2015, the Grand Canyon State ranked 49th among the U.S. states and the District of Columbia in education spending, at $7,938 per student. Total spending per student was down 11 percent between 2008 and 2015.

In that sense, Arizona is emblematic of another trend, according to Bruce Baker, a professor at Rutgers University Graduate School of Education who specializes in education finance.

Inflation-adjusted per-pupil spending, Arizona and Oklahoma, 2001-2015
Arizona and Oklahoma are among the states where per-pupil spending by school districts has not recovered to pre-recession levels. Note: Data shown in 2018 dollars, adjusted using the U.S. Bureau of Labor Statistics' CPI Inflation Calculator.
Source: U.S. Census Public Education Finances

“It was certainly many of the states that had thrown their systems under the bus altogether that really failed to rebound at all and in fact, kept plummeting,” Baker said.

The other states where inflation-adjusted per-pupil education spending was below 2008 levels in 2015 were Maryland, Oregon, Hawaii, North Carolina, South Carolina, New Mexico, Indiana, Mississippi, South Dakota, Wisconsin, Texas, California, Virginia, Nevada, Kansas, Colorado, Alabama, Idaho, Florida and Georgia.

Rising costs

Even though Minnesota’s per-pupil spending is higher than many states, advocates of increasing funding say schools need more money to provide services for a student body that’s increasingly costly to educate.

Research has found Minnesota to have, among states, a funding mechanism that allocates more money to districts with more high-need students. But Charlene Briner, deputy commissioner of the Minnesota Department of Education, says the pie isn’t big enough to adequately fund districts as costs rise.

“We do have changes in the demographics that Minnesota schools serve, so even if you adjust the spending for inflation, it doesn’t pick up the cost impact on the school districts from growing concentrations of special education students, ELL students, high poverty (students),” Melcher said.

But other lawmakers point out increases in the funding formula in recent years and say that it’s some districts’ budgeting — and not state policies — that are driving budget shortfalls.

“The Legislature has increased school funding every year – including significant new dollars above and beyond built-in increases for the 2018-2019 school years,” Sen. Carla Nelson, R-Rochester, who chairs the Senate E-12 Finance Committee, said in a statement to KSTP. “These budget shortfalls are not of the state’s making.”