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Education-funding overhaul plan OK’d by task force

MinnPost photo by Beth Hawkins
Anyone seeking to understand the state's education funding formula has to master the "runs."

An hour into Tuesday’s meeting of the panel tasked with overhauling the state’s education finance system, Tom Melcher paused to draw breath. “Any questions?” he asked.

There were none, just some sardonic chuckling. Where would anyone in his audience even begin to formulate a question?  

The head bean counter at the Minnesota Department of Education (MDE), Melcher was leading the 27 members of the state Education Finance Working Group through the “runs,” literally reams of tiny type projecting, down to the dollar, how the panel’s recommendations would play out.

Melcher is a legend in fiscal policy circles, known for his ability to find structural fixes that seemingly translate into more money in practice. A rumor that he may announce his retirement in coming months last week caused one education advocate to gasp, “That’s like losing Gandolf!”

MDE officials were circulating, handing out documents from stacks behind him that were still a couple of feet deep an hour and 15 minutes into the meeting. A few minutes later, many of those in attendance had given up trying to follow along and were tweeting one another.

“I was keeping up nicely until they handed out report number six,” Minnesota Public Radio’s Tim Post quipped.

“You know you’re deep in the weeds when property-tax details get the big laughs,” added Julie Blaha, president of Education Minnesota’s Anoka-Hennepin unit.

Meeting since June

The task force’s members have been meeting since June and had deliberately not asked Melcher for the runs. Their reasoning: It was better to craft a policy prescription that made sense and then let the resident wizard do his thing.

The presentation’s fat and sassy bottom line, which the task force promptly voted to approve: Schools could see a 7 percent increase in funding in the next four to six years without too much taxpayer pain. State education spending would rise from $9 billion a year to $9.7 billion by fiscal year 2019 at the latest with revenue increasing 1.2 percent to 1.7 percent a year.

The biggest structural fix in the package is the proposed shift of $300 of the property taxes Minnesotans now pay to their districts from a local levy to a state one, a smoother, more progressive tax. The money would go into the general education formula, which would be restored to its fiscal year 2003 level, adjusted for inflation.

The second-biggest item: State aid for special ed services, lagging some $600 million behind their actual cost, would rise by $150 million to $200 million.  

Increased per-pupil aid

A list literally pages long of pots of money earmarked for everything from ice arenas and trees would be collapsed into a much smaller number of fatter revenue streams that would increase state per-pupil-unit aid from $5,224 to $6,300. (Depending on their age and other factors, individual Minnesota schoolchildren are funded as weighted “units” that would range from .5 to 1.2.)

The formula would direct more resources toward disadvantaged kids,  with the poorest guaranteed all-day kindergarten. Integration revenue would also be distributed differently, with funding following students of color and stricter rules about its uses.

When Melcher stopped narrating at the 90-minute mark there were questions, all of which essentially amounted to: What happens if we — or the legislators who are likely to wrestle with this and other tax-reform proposals Gov. Mark Dayton is expected to put forth in the upcoming session — don’t like a particular line item on a particular page?

To each, Melcher game the same answer: Wins and losses are very carefully offset if the whole package is adopted. Start knocking out lines and you are playing fiscal Jenga. “It gets real tippy real quick,” Blaha summarized in a final tweet.

What happens when the “runs” get run at the Capitol, by people whose constituents are thinking of their wallets? Good question. At least Gandolf has a couple of months to come up with a spell that renders everything but the grand design invisible.

Comments (5)

  1. Submitted by Richard Pecar on 11/28/2012 - 10:22 am.

    “…weighted “units” that would range from .5 to 1.2.” I didn’t realize the state was doing this…I co-wrote a very similar formula in 1994 for an education bill moving through another state’s legislature.

    The weighted-student allocation of state aid provides “equity” and it makes sense. The denominator is the needs of each individual student.

    Now it’s off to the next step which is to generate adequate funds. The funds from property taxes should be levied as a function of the state and based “full and true” property valuations. this will allow the state to spread the revenue base across district lines, which means the money goes to the state first and not the districts…the weighted formula will protect the students, which is the point of the exercise.

    Contrary to the points I made in previous post, just maybe Minnesota’s state aid formula will disappear from the news…thank goodness!

  2. Submitted by Cathy Erickson on 11/28/2012 - 10:37 am.


    It’s Tom Melcher (not Melchor) – my school finance hero.

  3. Submitted by Steve Kotvis on 11/28/2012 - 06:20 pm.

    Another layer?

    I understand creating and maintaining a quality public education system is complex. And funding it is even more so. With as many different funding formulas and sources, I can only envision a tangled heap of hoses associated with programs and uses, and their sources and stipulations. And while I can’t help but today envision that this effort good intended, does it simply (or complexly) gloss over what we’ve got happening and creates just another layer to the whole system? Is it essentially covering up the heap of hoses with a whole lot of plaster that makes it less visible to see and correct what we already have in place?

    How about the State’s withholding of education funding to balance its own books? Might we first consider the legislators stop tapping the hose that is supposed to be place to fund schools first? Or are we to expect this is just something we can conveniently ignore year after year?

    How about making a commitment to not pass unfunded mandates? Isn’t that why much of the Special Education Funding is required, creating cross transfers from regular education because there are no such comparable mandates to counter those for Special Ed?

    And might we think about this in a similar context, the fiscal disparities collection and redistribution of funding used for Local Government Aid? While it is understandable that we need and want a system of fairness, it seems we should also do our best to not create unintended consequences of penalizing or creating disincentives for the generation of resources at the local levels. Passing local levies is hard work regardless of the wealth of a community. If we create too too many disincentives to supporting public education even in the wealthiest of communities, might we create a sense of, “Why should we. It’s only going to leave our district.” When we create an open invitation for people to leave the public education, opting for private schools, might we also create less support for local property tax levies to create this pool to be fairly distributed?

  4. Submitted by Richard Pecar on 11/29/2012 - 10:26 am.

    A couple of other points…

    “…The task force’s members have been meeting since June and had deliberately not asked Melcher for the runs. Their reasoning: It was better to craft a policy prescription that made sense and then let the resident wizard do his thing.”

    I forgot to mention the above is approach is critical to developing equitable state aid formulas. Focus on “student need” first; leave the number crunching to the computer program.

    Steve Kotvis raised some interesting points…too many for me to respond. But this much is sure; his “fire hose” analogy is spot-on.

    Here’s my take…first, every nickel must flow to — no exceptions — to student need, which is precisely what the weighted formula does.

    However, weighted formulations can get skewered if there isn’t seperate “categorical funding aid” for special education and for gifted children. These two categories should be funded separately. So, here are three fire hoses…but that’s okay, there only three.

    Here’s why…it began with the outcome-based testing agenda (about 1988) which has slowly but steadily forced teachers to shuffle “problem kids” into special education programs to get them out of the classroom in order to keep test score averages up. Many of these kids are problem kids, but are also teachable and the problem is they need discipline (and parental support); not a lower ratio of teachers to students like a slow learner might. State aid to special education should be removed from the weighted formula and dealt with as a “category” so that the teachable kids can be identified from the slow learners.

    The second category is “gifted”…and the state and society as a whole really need to make a huge, great big investment here. Of course, we aren’t.

    The hope and future of this nation is almost solely dependent on identifying gifted kids and helping them to excel to whatever heights they can…math, engineering or art.

    Many of these kids are bored they act out and wind up in special education classes. “Gifted” kids are the second “special need kid” and should be funded as a separate category.

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