MAKING SENSE OF PUBLIC EDUCATION FUNDING
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1 MAKING SENSE OF PUBLIC EDUCATION FUNDING West Metro Meeting Tom Melcher - School Finance Director September 26, 2017
2 TOPICS FOR DISCUSSION 1. Context for Public School Funding: Enrollment trends Minnesota s Overall Public Finance System Property Tax Levy Limits: Schools versus Cities and Counties 2. Fund Accounting / School Revenues and Expenditures by Fund 3. Components of General Education Revenue 4. School Funding Trends 9/26/2017 2
3 MINNESOTA SCHOOL ENROLLMENT, 1960 to /26/2017 3
4 SPECIAL POPULATIONS AS PERCENT OF PUBLIC SCHOOL ENROLLMENT 9/26/2017 4
5 PK-12 Education Revenue by Source 9/26/2017 5
6 PK-12 Education Revenue by Source 9/26/2017 6
7 MN PROPERTY TAX LEVY BY GOVERNMENT TYPE State Totals, , February 2017 Forecast 9/26/2017 7
8 PROPERTY TAX LEVY LIMITATIONS School Districts vs Cities and Counties SCHOOL DISTRICTS: Levy limits are set in law for each of about 50 categories of school levies based on funding formulas tied to number of students, tax base, census data, and approved costs School districts must get voter approval to make additional levies: Operating Referendum (Currently limited to $1,967 / Pupil Unit for most districts) Bond Referendum (facilities construction) Capital Project Referendum (mostly for instructional technology) 9/26/2017 8
9 PROPERTY TAX LEVY LIMITATIONS School Districts vs Cities and Counties CITIES AND COUNTIES: Cities and counties are not currently subject to general levy limits local elected officials are empowered to set property tax levies. General levy limits have been imposed periodically in the past (most recently in 2014) as a way to limit the overall growth of local property taxes, especially when there is a major change in state funding for these government units. There is a general rule that bonds may be issued only with voter approval; however, there are several exceptions to this rule, so as a practical matter, most local government bonds are issued without voter approval 9/26/2017 9
10 PK-12 Education Revenue by Source 9/26/
11 REVENUES AND EXPENDITURES BY FUND School district revenues and expenditures are segregated by fund for specific purposes set forth in law. Operating funds include the general fund, the food service fund, and the community service fund. Nonoperating funds include the building construction fund and the debt service fund. Transfers between funds are generally not permitted, with certain exceptions as specified in law. The Data Center on the MDE web site under Data Reports and Analytics has a Consolidated Financial Report page showing revenues and expenditures by fund for each district and state totals. 9/26/
12 TOTAL REVENUE BY FUND, State Total = $ Billion 9/26/
13 FOOD SERVICE REVENUE BY SOURCE, State Total = $468 Million 9/26/
14 COMMUNITY SERVICE REVENUE BY SOURCE, State Total = $484 Million 9/26/
15 DEBT SERVICE REVENUE BY SOURCE, State Total = $854 Million 9/26/
16 DEBT SERVICE LEVY BREAKDOWN, TAXES PAYABLE 2017 State Total = $843 Million Voter Approved (authorized by Bond Referendum) = $603 million Non-Voter Approved = $240 million Long-term facilities maintenance Special legislation for cities of the first class Facilities and equipment bonds (offsetting reduction to general fund levy) 9/26/
17 GENERAL FUND EXPENDITURES BY PROGRAM, State Total = $ Billion 9/26/
18 GENERAL FUND EXPENDITURES BY PROGRAM, Hopkins, Orono, Robbinsdale, Wayzata = $415 Million 9/26/
19 GENERAL FUND REVENUE BY SOURCE, State Total = $ Billion 9/26/
20 GENERAL FUND REVENUE BY SOURCE, Hopkins, Orono, Robbinsdale, Wayzata = $423 Million 9/26/
21 GENERAL FUND PROPERTY TAXES BY LEVY CATEGORY, State Total = $1.514 Billion 9/26/
22 GENERAL EDUCATION AID BY FORMULA COMPONENT, State Total = $6.685 Billion 9/26/
23 BASIC GENERAL EDUCATION REVENUE Basic Revenue = Formula Allowance x Adjusted Pupil Units Formula allowance is set in law: (Fiscal Year 2018) = $6, (Fiscal Year 2019) = $6,312 Adjusted Pupil Units: Adjusted means adjusted for open enrollment (Includes students open enrolling into the district from other MN districts; excludes students open enrolling out of the district to other districts or charter schools. Pupil units means Average Daily Membership (ADM) x Grade level weight (1.0 for Pre-K Grade 6; 1.2 for grades 7-12) 9/26/
24 BASIC GENERAL EDUCATION REVENUE Formula Allowance Adjusted for Pupil Weight Change and Inflation (CPI) 2017 End of Session 9/26/
25 OPERATING REFERENDUM AND LOCAL OPTIONAL REVENUE Provide unrestricted general fund revenue to supplement basic general education revenue Spread on Referendum Market Value (RMV) which excludes agricultural land and cabin property Historically, operating referendum revenue was all voter-approved, but beginning in FY 2015, districts were allowed to convert up to $300 per pupil unit to board-approved; and districts with less than $300 per pupil unit were allowed to add revenue by board action to get up to $300. 9/26/
26 OPERATING REFERENDUM AND LOCAL OPTIONAL REVENUE Local optional revenue provides districts with up to $424 per pupil unit of board-approved revenue. For districts that had voter approved referendum revenue in place for FY 2015, it replaces a portion of voter-approved referendum revenue it is deducted from referendum authority approved by the voters before For districts that did not have at least $424 per pupil unit of referendum revenue for FY 2015, it provides a revenue increase. The state provides aid to fund a portion of referendum and local optional revenue, depending on district RMV per pupil unit 9/26/
27 OPERATING REFERENDUM AND LOCAL OPTIONAL REVENUE PER STUDENT End of 2017 Session Est. 9/26/
28 COMPENSATORY REVENUE Must be used to meet the educational needs of pupils who enroll under-prepared to learn and whose educational progress is below the level that is appropriate for learners of their age. State aid for each school site is based on the sum of the number of students eligible for free lunch and ½ of the number eligible for reduced price lunch as a percent of total enrollment on October 1 of the previous school year ( poverty concentration ). The amount of compensatory aid per student eligible for free lunch increases as poverty concentration increases (from $401 for a school with a 10% concentration to $3,209 for a school with an 80% or higher concentration). Students eligible for reduced price lunch generate ½ of the amount generated by students eligible for free lunch. 9/26/
29 COMPENSATORY REVENUE, FY 2018 Per Student Eligible for Free Lunch by Poverty Concentration 9/26/
30 STATE SPECIAL EDUCATION AID PER STUDENT End of 2017 Session Est. 9/26/
31 STATE AND FEDERAL SPECIAL EDUCATION AID AS PERCENT OF COST, 2003 = /26/
32 AVERAGE SPECIAL EDUCATION CROSS SUBSIDY (UNFUNDED COST) PER ADM, FY 2003 FY /26/
33 Questions? 9/26/
34 Thank you! Tom Melcher /26/
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