When voters head to the polls next month in the 113 communities [PDF] where school referenda are on the ballot, the number most will have on their minds is the one that’s likely to show up on their property-tax bill.
Those few who have been paying attention to their local referendum campaign are like to have heard the cost to homeowners expressed as a particular number of dollars per $100,000 of their house’s assessed value.
And so regardless how they vote, most people will consider their community’s housing base and assume that property values have everything to do with whether their schools are wealthy, like White Bear Lake, or impoverished, like Brooklyn Center.
Strictly speaking, all of that is true. But when it comes to explaining the inequities in school finance in Minnesota, it’s only part of the picture.
The other two key factors: The amount of commercial and industrial property being taxed along with those homes; and the 18 years that have elapsed since the state revisited the formula it uses to smooth out the resulting inequalities in school revenues.
The underlying calculations make the 60/40 funding shift seem simple indeed.
Different bang for the bucks
For example, the owner of our hypothetical $100,000 home in Wayzata pays $165 in property taxes earmarked for schools, which receive $1,531 per pupil in levy funding. Meanwhile, the owner of a house with the same value in Centennial pays $145 toward a levy that contributes $689 per student.
Taxpayers, in other words, are not getting the same bang for their hard-earned bucks.
Who’s to blame? Lawmakers have failed to adjust the formula for equalization, the state aid “match” — think revenue-sharing, as in Major League Baseball — that is supposed to provide relief to taxpayers in districts with less expensive homes.
(And arguably lawmakers have participated in the creation of a school funding system that’s so complicated most Minnesotans have no idea whether school funding is up or down, as asserted by both political parties, much less whether it adequately funds education as mandated by the state’s constitution.)
In 1993, 65 percent of Minnesota districts had referenda, and state equalization aid made up 5 percent of the $361-a-head total. Equalization peaked three years later at 38 percent.
As housing values rose, driving down the crude number of dollars districts were entitled to, the Legislature failed to adjust the formula. Numbers began falling dramatically in the early part of the last decade in part because of former Gov. Tim Pawlenty’s policies.
Today, 89.6 percent of school districts have levies averaging $1,055 per student. State equalization makes up 8 percent of the total.
Where the wealth is
The rest of the reasons underlying the inequities are historical, however. Most of Minnesota’s property wealth — the aforementioned commercial and industrial land — is located in the cities and first-ring suburbs.
“That’s because that’s where the roads are,” explained Brad Lundell, executive director of Schools for Equity in Education (SEE), a St. Paul-based nonprofit that advocates for more than 50 Minnesota districts on the losing end of the spectrum. Many were small towns when those first-tier suburbs were landing manufacturing facilities, office parks and malls.
Another illustration: In Minnetonka, home to Ridgedale and lots of commercial real estate, the levy on a $100,000 home is $200. But schools get $1,890 per student. Homeowners in Forest Lake pay $125 toward a $725 levy.
Lundell, whose website is home to an impressive collection of documents that might well be titled, “School Finance for Dummies,” has come up with a system for expressing this bang-for-bucks equation SEE calls the referendum revenue per burden.
Using this calculation, Orono’s high-end housing market earns it a 14.25. The working- and middle-class bedroom communities of SEE member Anoka-Hennepin, meanwhile, garner a 4.42.
Not all of SEE’s districts serve kids from communities typically thought of as poor. Stillwater is a member, as are Rosemount-Apple Valley-Eagan, South Washington County and Northfield.
For the record, SEE does not maintain that all districts should have the same amount of money. The group would like taxpayer dollars in each to stretch as far, however.
A proposed solution
SEE’s proposed solution would look a lot like the financial restructuring proposed last spring by a task force appointed by Gov. Mark Dayton. In essence, the fix proposed [PDF] by that group would roll most levy dollars into a general, statewide education referendum. In addition, the group would like to see the equalization formula brought up to date.
In the meantime, what’s an education-minded voter in a place like Forest Lake to do? Unfair though the system is, Lundell would have them vote to renew or even increase their local levy.
“SEE districts are well below the state average in terms of state funding per pupil,” he said. “Referenda are one way to close that gap.”
And even if a structural solution were to pass a GOP-dominated legislature, chances are revenue for schools will still be scarce when the 2013-2014 state budget comes up for debate.
“Passing a levy this year is one way to head off a funding gap in the next three to four years,” said Lundell.