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Executive Summary
In 2001, Minnesota lawmakers made a brave and farsighted decision: They adopted a plan in which the state would pay almost all K-12 education costs. This plan modified the previous system in which the state shared funding responsibility with local property taxpayers. Under the 2001 plan, voters would be asked to raise their property taxes only to pay for "extras" that would enhance local education.

The plan was hailed as a new start for Minnesota education. The quality of education would no longer be determined by the wealth of the district. Schools would no longer be hamstrung by voters who say no to any tax, no matter how justified.

Sadly, the state hasn't kept its promise. Under Gov. Tim Pawlenty, state aid for schools has dropped, forcing school districts to again rely on voter-approved property tax hikes to pay for education. In 2001, the statewide average levy amount per student was $666. That number dropped to $357 in 2001, but since taking office, Pawlenty has watched as the per-student levy average shot to $796 in 2006. Superintendents say the average levy amount will soon top $1,500 per student, all from the property taxpayer's pocket.

Superintendents said they have become the state's tax man. "Pawlenty may have a 'no new taxes' pledge, but he simply put raising taxes onto the shoulders of school districts," one superintendent said.

All schools except those in wealthy districts have felt the crunch. In many districts voters have understandably refused to raise their own taxes. To pay their bills, financially starved districts have resorted to teacher layoffs and cutbacks in successful programs such as world language, fine arts and programs for gifted students.

The state's underfunding spared no district. Even when voters approved a tax increase, overall school revenue went down - an inflation-adjusted statewide average of 4.4 percent since 2003. More than 99 percent of districts saw state aid decrease since 2003. Nearly 75 percent have less revenue from both levy and state aid than in 2003.

In December 2007, Minnesota 2020 asked 321 Minnesota superintendents about the state's education funding system. Fifty five percent of the superintendents, or 177, responded.

Superintendents are responsible for both the educational quality and financial health of their districts. Most are well qualified for the job: Many have doctorates and most worked as teachers and principals before becoming superintendents. They are uniquely qualified to examine how state support affects schools.

Nearly every superintendent surveyed said the system is broken. Raising a significant portion of the district's budget through voter-approved levies is inefficient and uncertain. Nearly 90 percent said the financial system is lowering the quality of education in Minnesota.

The problem has hit rural districts especially hard. Eighty three percent of rural districts have operating levies. Every rural superintendent said the state aid/property tax formula is a bad way to fund schools, the quality of education has dropped since 2003 and unless the funding system changes within the next two years, educational quality will continue to decline

Faced with an education funding crisis, Pawlenty has adhered to his "no new taxes" pledge. His intransigence is no longer acceptable. Minnesota requires a leader who will roll back the onerous property tax levies and who will relieve schools of the financial burden that is ruining educational
 quality.

The superintendents send a chilling call to St. Paul. Addressing this issue during budget talks in 2009 or with a new governor in 2011 may be too late. More than 88 percent of superintendents said education quality will continue to degrade if action isn't taken now.

Key Findings

• Nearly 100 percent of school superintendents believe Minnesota's education funding system is a failure.
  
  
• The funding system is hurting education. 60 percent say state underfunding is causing the quality of education to get worse and 88 percent say that if the funding system isn't fixed, the quality of education will continue to decline.
  
  
• Districts that lost levy elections in 2007 face dire financial problems. These districts will fire an average of seven teachers. More than 15 percent of their operating budget comes from voter-approved levies. More than 70 percent must go to voters again this November, and 86 percent must run another levy election within three years.
  
  
• The number of districts without a property tax levy continues to shrink. Of the districts without an operating levy, 25 percent will ask voters for money in 2008. More than 60 percent say they don't have a levy because their community won't support a property tax increase.
  
  
• 65 percent of the superintendents believe the state should provide all education funding and not force districts to rely on property tax levies.

John Fitzgerald
Minnesota 2020 Fellow
john.fitzgerald@mn2020.org

http://www.mn2020.org/index.asp?Type=B_BASIC&SEC={9A473CF8-64D9-49E3-A5F3-B690488FA728}&DE=