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Minnesota school district’s wind-power windfall is gone with the political winds

By Joe Kimball | Tuesday, Nov. 27, 2007
No fair, says school superintendent Joe Brown. His rural Grand Meadow school district had been counting on extra tax funds from Minnesota’s state’s burgeoning wind turbine industry.

Grand Meadow windmills
Photo by Joe Kimball
Windmills are on the rise throughout the Grand Meadow area. These windmills, about four miles south of town, are visible from the school.


GRAND MEADOW, MINN. — Joe Brown, the superintendent of schools here, is a passionate and excitable guy, a former social studies teacher and principal who is positively thrilled to be in charge of this rural district with its energy-efficient geodesic domes housing K-12 students and the administrative offices.

You can only imagine the high-fives he exchanged with teachers and students when he believed some extra funds might be blowing in the wind toward his cash-poor district. For just four miles south of town, a new crop of wind turbines has sprouted on the fertile corn and soybean fields that stretch to the horizon, toward the nearby Iowa border.

It looked like in 2009, when the bulk of the area wind turbines would have been operating more than a year, he’d have an extra $50,000 annually, enough for a second high-school science teacher. Other rural, southern Minnesota school districts stood to gain, too. They don’t have lots of industries to boost their tax base, but they do have wind.

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But that early euphoria evaporated last spring at the Legislature. Now Brown is spearheading an effort to recapture the windblown aid.

It began in 2002, with a state law designed to entice wind farms to Minnesota. The law exempted wind generation from property taxes, declaring instead a wind energy production tax of 0.12 of 1 cent per kilowatt hour. The law declared that 80 percent of that money would go to the wind farm’s county, 14 percent to the city and 6 percent to the school district.

At first, that wasn’t a lot of dough for the Super Larks of Grand Meadow, but when a second phase of giant turbines begins turning this month — bringing the total to 104 of the three-spoked behemoths — it begins to look like real money. Brown thought he’d have enough for that extra science teacher for at least the next 20 years.

With a staff of 32 teachers, Brown has worked hard to live up to Gov. Tim Pawlenty’s push to increase math and science classes, so he was thinking another science teacher would be just what the governor ordered.

Blowing in the wind
Last spring, though, a small paragraph halfway through the voluminous Omnibus Education Bill derailed Brown’s plan.

It says: “Each year the amount of money apportioned to a district for that year, pursuant to sections 127A.34, subdivision 2 and 272.029, subdivision 6, must be deducted from the general education aid earned by that district for the same year or from aid earned from other state sources.”

So what the wind bringeth, the state taketh away.

(The law change did not take the wind money shares away from the counties or cities starting in 2009. Just schools.)

Other school districts in south central and western school Minnesota also are affected, among them Southland, Lake Benton, Murray County Central, Pipestone.

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Randy Wanke of the state Department of Education notes that the law change says the “givebacks” begin in 2009, so that the schools will get to keep their wind payments in 2008. That will total $25,000 to $30,000 in Grand Meadow.

Still, a chorus of complaints from the affected districts, with Brown’s voice in the forefront, have peppered state officials and legislators. (Among them is Brown’s wife, Robin Brown, a DFL state representative from nearby Austin.)

The state response — in letters with nearly identical wording from Pawlenty and Education Commissioner Alice Seagren — is that it’s not fair for wind-blessed districts to profit when wind-challenged districts don’t.

“…(T)he subtraction seems to be an extension of the long-standing policy of school district receipts from power line taxes, liquor licenses, fines and other miscellaneous receipts from the district’s general education aid.,” wrote Pawlenty in a letter to Brown this summer.

Added Seagren: “Although this legislation has some unfortunate short-term consequences for a few districts such as yours, ultimately this money enables the state to fund a higher general education formula which will benefit all districts in the state equally.”

Equal treatment? Rural districts don’t buy it
Equally? Forget it, says Brown.

“It drives me nuts. School funding is not equitable,” he said. His district gets thousands less per student than suburban school districts, he said. Even with students on free lunch programs, his district gets a small percentage of the extra payments sent to urban schools.

Grand Meadow got a double whammy this month, when a levy vote was defeated. Brown thinks the wind money setback played a role in the loss. “People said, ‘Why give the school more money? The state just takes it away,’ ” Brown said.

According to a House of Representatives research memo, the wind payments originally were intended to be treated at a type of property tax receipt, which would provide a direct benefit to the school district, much the same as the property tax payments from a factory or a string of car dealerships.

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“If each of those structures were $1.2 million factories, instead of $1.2 million windmills, it would sure decrease the property taxes for residents” Brown said.

Superintendent Joe Brown
Photo by Joe Kimball
Joe Brown, superintendent of the Grand Meadow Schools, is among rural officials launching a campaign to restore wind-turbine tax funds to area school districts.


Al Stier, a grain farmer in Grand Meadow, feels used. “They’ve been telling us for years that we need to bring business to our small towns to relieve the property tax pressure. Then we get something here, and they take it away,” Stier said.

He has three giant windmills on his land. One of the big selling points, he said, was the production tax benefit to the schools. And Grand Meadow, he said, needs help.

“Rochester’s got the Mayo Clinic and IBM, Austin has Hormel and Quality Pork, and Grand Meadow is going to have nothing. We did have windmills, but they’re taking that away,” he said.

“My wife and I went in to this thinking it would generate money for our local economy and the school, and it would reduce dependence on foreign oil: two big pluses. Now, it’s down to one big plus.”

Stier and the other property owners with turbines on their land get annual payments from the wind company, but also lose some production area and have to farm around the big windmills and the many access roads needed to build and service the behemoths. “Of course there’s some financial gain, but we really thought we’d be helping the schools, too,” Stier said.

Changing law may be tough sell
With one child still attending Grand Meadow school and four children who have graduated, Stier said he’ll head to St. Paul to try to persuade legislators to change the law back. Many worry, though, that it might be a tough sell.

State Rep. Bob Gunther, R-Fairmont, has told Superintendent Brown that he appreciates the dilemma but doesn’t see much chance of getting the law changed.

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“There is and always has been strict policy on keeping the schools in Minnesota on a level competitive balance. By allowing a handful of schools to accept this tax credit money, an unfair advantage would be given,” Gunther said in a letter to Brown this month. “I will speak with the governor in regard to turbine tax credits; however, it will be very difficult to have the legislation passed.”

Still, there are legislators who will go to bat for the windy districts.

Rep. Randy Demmer, R-Hayfield, has windmills in his district, including 25 about seven miles from his house. “I can see them out my window when the leaves have fallen,” he said. He plans to introduce a bill to return the wind payments to the schools.

Demmer said he’s argued with the Education Department and the governor’s office that the wind tax should be treated like property taxes, just as if a new business opened or someone built a new factory. “It should add to the tax base for the jurisdiction,” he said.

(One of the subtle reasons it was changed in the first place, he believes, is because the DFL majority generally doesn’t represent those windy rural districts.)

“In the metro area, when Medtronic puts up a new building, it helps that local district. It should be the same here,” he said.

The always optimistic Demmer said he’s confident he can get the money back for the schools.

“It’s the right thing to do, and on a statewide basis, it’s not a large amount of money. But to Hayfield and Grand Meadow and the other small districts, it’s a big deal,” he said.

Superintendent Brown and others make it clear that the wind companies are not to blame; they pay the energy production tax as required.

And in Grand Meadow, the Horizon Wind Energy company has gone above and beyond, he said. Earlier this month, Doug Jones of Horizon presented the school board with a check for $23,000 for new computers for all the high school students. It wasn’t part of the mandated payments, but the school district had requested a grant, and it was approved.

Joe Kimball, a former columnist and reporter for the Star Tribune, reports on St. Paul City Hall, Ramsey County politic and other topics. He can be reached at jkimball [at] minnpost [dot] com.