By Jolene Farley
The state of Minnesota’s new system of funding education has jeopardized students’ futures, has taken funding options away from rural school districts and hasn’t done that many favors to local property tax payers.
That’s the position asserted by the Minnesota Rural Education Association in a video detailing the effect of the 2001 property tax reform on rural Minnesota schools.
The Hills-Beaver Creek School Board and Superintendent Dave Deragisch reviewed the video, "Tax Reform One Year Later," at a recent meeting, and Deragisch agrees with the MREA.
"I thought what they said was very true for rural state of Minnesota schools," he said.
It is MREA’s position that the dramatic property tax reform left students with less stable funding, rural school districts with smaller tax bases, students with less funding and taxpayers with increasing property tax bills.
Cost of the takeover
It cost $1 billion to remove education from property tax rolls, according to MREA. When the economy was doing well, costs where covered by surplus sales and income tax revenues. By the second year, after an economic slowdown, the legislature turned to the schools to borrow to cover the cost.
Less stable funding
Dollars are no longer dedicated exclusively to education. In the past, local property taxes paid one-third of the entire cost of education.
"Education is forced to compete with other aspects of state budgets," said the video. "The takeover left education with less stable revenue."
Rural districts have smaller tax bases
MREA maintains that students in rural districts went from a buying power comparable to students in metro districts to having a tax base only one-half as big.
With the removal of agricultural land from the tax rolls, homes and businesses in rural areas may be unable to sustain the cost of excess levies.
If property tax is used to increase basic education funding, MREA believes:
It should be a statewide general education tax on all property.
It must be levied by the state and not at the discretion of local school boards.
It must be fully equalized to be fair to each student.
Students with
less funding
Districts are funded on a per pupil basis by the legislature. Administrators and school boards are sometimes unable to trim costs as quickly as they lose students.
Deragisch agrees. "Everything is based on student pupil numbers, in the rural schools we struggle every year to maintain our number of students," he said.
Currently throughout the state, increased costs are driven by higher special education costs, health insurance cost increases, technology costs, and limited English usage.
Internet access charges for students vary from district to district. For example, the cost per student per year in one district is $530 while in another metro district the cost is $1 per student per year.
In 2003, state funding to equalize technology will be eliminated.
Limited English costs have increased by 230 percent in the last 10 years, according to the video.
Property taxes creep up
Decreased tax burdens implemented in 2002 are creeping back to higher 2001 levels.
Operating or bond levies for schools increased 66 percent between 2002-03.
The dramatic buy down of school levies in 2002 could make a 2003 increase appear large or property valuation increases, from 8 to 10 percent over the last four years, could contribute.
Reimbursement of consistent costs
Deragisch thinks the state should reimburse districts for costs that are consistent from one district to the next, regardless of whether the district is rural or metropolitan. This reimbursement wouldn’t be driven by enrollment.
Some fixed costs are heat, fuel and special education. Every district pays for these costs no matter how many students are in the district.
"There’s direct costs that could be funded that are constant throughout the state," he said.
With a $4.6 billion projected state deficit, Deragisch doubts the new administration, under Governor Tim Pawlenty, will solve funding problems in the near future.
"I along with every superintendent in Minnesota is nervous as to how the schools will be affected," he said. "Any reduction in school funding would be devastating to a lot of school districts."
Deragisch would like to see the state fund mandated programs. "We have mandates, and many times, they are funded the first year and then the funding is absorbed and we still have the reoccurring costs."
Adequate, predictable funding is the goal
MREA is an association of 150 school districts, about 40 percent of the state’s independent school districts, located in non-metropolitan Minnesota, according to their Web site.
The organization was founded in 1985 by a group of school board members and administrators who believed that non-metro school districts need a clearer voice in St. Paul. Members include teachers, school board members, and administrators.
MREA’s 2003 platform includes adequate, predictable funding which includes the full cost of special education mandates, a continued state commitment to equitably and entirely fund basic education, broad technology access and more state technology support and incentives to reorganize district administrative and financial services.