House DFLers unveil education funding measure

Minnesota House Democrats would boost K-12 funding to students 1 percent next year under a supplemental budget bill unveiled Wednesday.

And Assistant House Majority Leader Frank Moe, DFL-Bemidji, would eliminate operating referendums on property taxes as a way to fund schools.

Moe had a hearing on his bill Tuesday in the House K-12 Finance Committee, and said later in an interview that he intends to attach the bill as an amendment to this year's omnibus education bill.

On Wednesday, House K-12 Education Finance Division Chairwoman Mindy Greiling, DFL-Roseville, outlined a $49 million supplemental budget proposal in state aid to schools, amounting to a funding increase of 1 percent for 2009.

"In no way is this a comprehensive education funding bill -- rather it's emergency relief for schools that are hurting," Greiling said in a statement. "What we're doing is providing short-term relief to schools that are struggling to keep their heads above water."

The proposal calls for every school district to receive additional one-time state education aid for 2009. Districts would get a $51 increase per student, distributed equally, and across the board to every district.

They would also have additional short-term flexibility to meet urgent needs by allowing them to make a one-time only transfer from the district's capital budget to the district's general fund, Greiling said, amounting to an additional $51 per student that may be transferred.

"Even in times of economic downturn, children still come to school to learn," Greiling said during a panel hearing Wednesday. "We can't afford to compromise the quality of their education if we're serious about creating world-class students for the 21st century workforce and retaining our status an a national leader in education."

Under Moe's bill, the authority that school districts have to levy for operating revenue would be eliminated for fiscal year 2010. The governor and the Legislature would also have to recommend a different source of funding for schools.

The bill is needed, Moe said, as the current system has created "haves" and "have-nots" as wealthier school districts are able to pass referendums for extra tax dollars.

"Adding $500 to a home's property taxes in the metro suburbs is a lot different than adding $500 to a home in Bemidji," Moe said, adding that Bemidji School District voters turned down two levels of operating referendums last fall.

If the bill were to pass, Moe said, "we're all going to be in the water together, looking for a solution to the financial crisis at so many of the state's schools. Right now, property-rich school districts are in the lifeboat, while the rest of us are struggling. The Minnesota Constitution explicitly states that the system to fund schools needs to fair and equitable. Right now, we aren't in compliance with the state's Constitution."

Last fall, 99 school districts across the state held levy referendums, a number that rises each year as school districts turn to property taxpayers to supplement state aid with local dollars to prevent budget cuts and teacher layoffs.

The Bemidji School Board plans to ask voters again this fall to approve an operating levy, as the current levy expires.

"This funding mechanism is a big reason why we have a growing opportunity gap between school districts in Minnesota," Moe said. "Those districts that can pass referendums need to get in the water with the rest of us."

During the hearing, Moe said he provided legislators with a chart that showed cost differences between communities for raising the allowed 26 percent of the formula allowance through property taxes.

For example, the owner of a $250,000 property in Orono pays $292 in operating levies in order for the school to raise the full 26 percent allowance. However, in Bemidji, the owner of $250,000 property pays $977. In 147 mostly small and rural districts, owners of $250,000 properties pay $1,086.

"We can't blame the communities when levies are voted down," Moe said. "Most do support their schools and want what's best for their kids. They just can't afford the property tax increases that are asked them."

Quality education suffers in many communities because of the way schools are funded, he added.

"Because property taxes make up an average of 26 percent of school budgets, a defeated operating levy can have a dramatic impact on the quality of education quality in that district," the Bemidji Democrat said. "More often than not, when a levy goes down, school officials are forced to lay off teachers, cut programs and curriculum and increase class sizes."

State per-pupil funding has dropped between $989 and $542, depending on the district, during Gov. Tim Pawlenty's administration, Moe said. In 2003, the state paid 75 percent of school costs and property taxpayers 19 percent. In 2007, the state share was 68 percent and the property tax portion 26 percent.

"This is a recipe for disaster," Moe said. "Levy referendums have become a backdoor way for the state to avoid its responsibility when it comes to education funding."

Greiling, in introducing her budget plan Wednesday, agreed.

"By protecting the gains we made to dig schools out of the hole last year, and shoring up funding for the coming year -- a hole created by cuts made to balance the state's last budget deficit -- we can lay the foundation to move forward with real education funding reform," she said.

A bipartisan task force is working on a plan to reform the way Minnesota schools are funded, and is scheduled to report to the Legislature within a few weeks, Greiling added.