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Does Increasing K-12 State Funding Mean Less Local Tax Pressure?

I've written this year about new dynamics for state school funding, and how different states have different approaches about the best way to use increased K-12 funding in the wake of the Great Recession. Yet even in states that have decided to be more generous with their public schools, that doesn't mean a magic carpet will whisk away all the fiscal issues for the districts and individual schools relying heavily on state dollars.

One example of what I'm talking about is in Minnesota, the state I featured in my March 6 story along with Ohio. As Christopher Magan at the St. Paul Pioneer Press reports, the $485 million in new school spending released by state lawmakers comes with a few strings attached and perhaps a gaping loophole in terms of future tax burdens.

As you may recall, the Minnesota funding increase pushed by Gov. Mark Dayton, of the Democrat-Farmer-Labor Party, was predicated on the approval of significant new tax increases, to the tune of $2 billion. But there was an effort in the budget to stop districts from tacking on more new taxes to property owners. There were three exceptions to this "freeze" on new levies from local schools, Magan reports:

• Districts are exempt from the freeze if they have no previous local levies on the books.

• Districts are exempt if they have a negative fund balance.

• Districts are exempt if they put a new levy request to voters before June 30.

If that last one stands out to you, you're not alone. Magan quotes a conservative fiscal think tank official and a Republican state legislators saying that the "freeze" is in fact a gimmick designed to give people the illusion that state government, controlled by Democrats, was giving property owners a break on taxes. Democrats, however, say that the message behind the state's biennial budget was that local school leaders, in light of new state funding, should consider proposing new levies very carefully, even if there's no absolute prohibition.

Broadly speaking, from 2008 to 2011, according to U.S. Census figures, Washington's share of all K-12 spending jumped from 8 percent to 12 percent, while state spending not surprisingly slumped from 48 to 44 percent. (The federal share slipped slightly, by about half a percentage point, from 2010 to 2011). Those census figures tell you that local spending on schools was static, staying at 44 percent. It will be interesting to see in future years whether local spending continues to remain so.

The Minnesota School Boards Association was alerting districts to the June 30 levy deadline in the last weeks before the deadline actually arrived. In a June 13 memo to district superintendents and business manages, Tom Melcher, the association's school finance director, very clearly laid out that deadline and other important dates for proposing new levies to voters.

In a survey conducted during the spring, the school boards association said that of the 286 districts that responded (out of 337 total districts in the state), 72 districts planned to go for an "operating referendum," also known as a local school levy, later this year. In 2011, the number of districts that sought these levies was 114, up from 59 in 2009.

"Generally speaking, what we are hearing is that districts are very happy with this year's education bill, which includes substantial new funding as well as significant funding and policy reforms," Charlene Briner, chief of staff to Minnesota Commissioner of Education Brenda Cassellius, wrote to me in an email. "That said, we also understand that one very good session does not make up for the years of disinvestment that preceded Governor Dayton's administration."

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