The Referendum portion of the General Education Formula Allowance refers to the state aid provided through equalization and is distinct from local levy Referendum Revenue generated at the local level outside of the General Education Formula Allowance and Categorical Aids.

Key Features

• Referendum revenue is capped (except in districts eligible for sparsity revenue). This means that school districts with significant property wealth aren't allowed to increase revenues beyond the limits imposed by the state legislature.  This is frustrating to some communities who have the property wealth and will to increase taxes to more adequately fund public schools. These communities are increasingly turning to Local Education Foundations to support their schools. This, in effect, bypasses the system that is set up to provide a quality education for ALL Minnesota children, not just those in property-rich districts.
  
  
• Referendum revenue is equalized. That is, the state pays in aid the difference between what is raised by a local levy and a guaranteed revenue amount. Equalization is used to make referendum revenue for districts with varying tax bases the same, which is fine in theory but doesn't work in the context of underfunding.

Sound messy? It is, especially when in some fiscal years the state has rolled a portion of local referendum dollars into the sum it claims to have increased the state per pupil formula funding.

Referendum revenue calculations can (but don't always) include voter-approved local levies plus equalization aid and tax base replacement aid paid by the state.

Note: Referendum Tax Base Replacement Aid - In 2001, agriculture land and seasonal recreational property were removed from school district levy tax base. Referendum tax base replacement aid was created at the same time, but only applied to districts with existing local levies greater than $415 per student before the conversion. Tax Base Replacement Aid was made permanent in 2003. For more information, see Levy History.

Resources

School District Referendum Elections - House Research, Minnesota House of Representatives.

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January 2007 - A History of the School Operating Levy Referendum - Includes historical trends and legislative changes, Minnesota House of Representatives Fiscal Analysis Department.

September 2005 - Financing Education in Minnesota 2005-06 - Offers an in-depth description of Referendum revenue and sample calculations, Minnesota House of Representatives Fiscal Analysis Department.

June 2005 - School Operating Referendum: No longer just for “extras”, Association of Metropolitan School Districts (article begins, page 2).