Education funding: the downhill slide continues

As some Minnesota school districts consider a radical four-day school week cost-saving measure, state support for schools has dropped once again.

The May “Price of Government” report, which incorporates changes made during the 2008 legislative session, shows that after adjusting for inflation in government purchases, state aid and total public school revenue continues to erode.

Per pupil state aid in fiscal year 2008-09 (which began July 1, 2008) will be $8,419; after adjusting for inflation, this is 0.8 percent less than fiscal year 2007-08 and 13.4 percent less than in fiscal year 2002-03, the last year before Gov. Tim Pawlenty took office.

Nothing in the May “Price of Government” report reversed the school funding decline previously documented by Minnesota 2020.

The chart below shows the change in total public school revenue, state aid, and property taxes in constant 2008-09 dollars per pupil since 2002-03.

From 2002-03 to 2008-09, state aid to Minnesota public schools declined by $1,297 per pupil in constant 2008-09 dollars. Over the same period, property taxes increased by $752 per pupil. Because the property tax increase was less than the reduction in state aid, total school district revenue declined by $451 dollars per pupil from 2002-03 to 2008-09 – a 3.4 percent decline. The real per pupil revenue decline from 2002-03 to 2008-09 would have been $546 if not for an increase of $95 per pupil in other school revenues-primarily fees and other own-source non-tax revenue.

Schools have tried to keep their heads above water as state funding dries up. They terminated teachers and staff, dropped academic subjects, closed buildings, and tried their best to keep the quality of Minnesota education from becoming an embarrassment.

Greg Schmidt is the superintendent at the MACCRAY school district, where teachers have been laid off and the remaining teachers have taken a pay cut. The district will go to a four-day school week this fall to try to save money in heating and fuel costs.

“We’ve been pretty responsible with our funds but you can’t keep up,” he said. “Our fund balance has gone down and down. The state holds districts responsible for finances, but if there’s no money, we can’t do it.”

In a nutshell, the school revenue situation illustrates the impact of the “no new tax” policy. State leaders have avoided the need for a state tax increase by cutting aid to local governments. To make up for the loss of state aid, school districts and other local governments have had to increase property taxes at the same time that they are cutting budgets. In this way, the adherents of “no new taxes” have shifted the state’s budget problems on to the backs of local governments and local property taxpayers.

As illustrated in the graph, real state aid to school districts will fall by another $300 per pupil from 2008-09 to 2009-10 and by additional $100 per pupil in 2010-11 based on end-of-session “Price of Government” data. However, state aid amounts for 2009-10 and 2010-11 are projections based on current law; the actual level of state aid to schools will be set during the 2009 legislative session.

Using information from the “Price of Government” report, it is possible to determine the amount of state aid necessary to prevent further erosion of state support for public education in 2009-10 and 2010-11:

* To maintain real state aid to schools at the 2008-09 level, the state will need to increase aid to schools above the projected current law amounts by $252 million in 2009-10 and by $312 million in 2010-11. * To restore real state aid to the 2002-03 level, the state will need to increase school aid above the projected current law amounts by $1.4 billion in 2009-10 and $1.5 billion in 2010-11.

It’s time for the people of Minnesota to decide whether they are content with the school funding status quo-which amounts to perennial property tax increases and school funding cuts-or whether they want to use progressive state revenues to restore past state funding cuts and reverse the trend of increasing dependence on property taxes to fund public education.

It’s time to choose between good or bad public policy. We’re experiencing the consequences of bad choices; let’s try good policy for a change.