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Published in Print: June 6, 2001, as Minnesota Poised To Shift More School Spending to State

Minnesota Poised To Shift More School Spending to State

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Despite striking a deal to meet Gov. Jesse Ventura's long-standing demand for an overhaul of Minnesota's school finance system, the legislature continued to labor last week over the final details of a biennial budget.

Under a proposal crafted by the Ventura administration, the state is poised to take over the day-to-day costs of K-12 education, shifting that burden away from the local property-tax base. The state pays about 70 percent of school operating costs now, for items such as teacher salaries, books, and fuel bills; the rest is covered by local property taxes.

The deal came after the official end of the state's 2001 regular legislative session at midnight on May 21. The only spending bill to squeak through the House and the Senate before that deadline—a $544 million early-childhood-education bill—was promptly vetoed by the governor.

Mr. Ventura, an Independent, cited what he saw as a number of problems with that legislation, including its failure to go along with his administration's proposal to consolidate the state's three child-care- assistance programs. But the governor also vowed not to approve a single budget bill for the 2001-02 and 2002-03 fiscal years until the legislature had acted on his tax proposals.

"My top priority continues to be tax reform," Gov. Ventura wrote in his veto letter, "and I will require a completed tax bill before I put my signature on any of the spending bills."

The Ventura administration and the legislature did reach general agreement before the Memorial Day weekend on budget amounts and the revamped system for funding schools. The deal included about $800 million for local property-tax reductions and $926 million in new state spending, including about $381 million in additional money for K-12 education over two years.

The plan also calls for removing $310 per student from voter-approved levies being charged to property- tax payers and covering those costs with state-funded general education formulas. The 37 districts without levies would get an additional $310 per child in state aid, phased in over four years, beginning in fiscal year 2002- 03, and those with levies of less than $310 per student would also get more money.

James W. Guthrie, a professor of public policy and education at Vanderbilt University in Nashville, Tenn., and an expert on finance issues, called the Minnesota governor's plan "creative as a compromise," but said it did not break new ground in school finance reform.

"In order to be earthshaking, the governor would have to do something like propose eliminating the property tax altogether or eliminate local district access to the property tax," Mr. Guthrie said. "He would have to link school [funding] to student performance. Those would be 'radical' ideas, such as are being implemented or considered in states such as Wyoming or Florida."

But Gov. Ventura said in a May 25 press conference that his proposal "clearly delivers on the promise I made to Minnesotans last January: permanent property-tax relief starting next year, combined with fundamental reforms of the tax and school financing system."

Tight Turnaround

The governor warned lawmakers they would need to begin a special session and pass the tax plan and budget before June 11 to give counties and school districts enough time to plan their budgets and prepare for the tax changes before the start of the new fiscal year, July 1.

Key legislators predicted last week that the deadline would be met despite continuing disagreements over how much to increase education spending. Some Democrats said the plan pushed by the governor and House Republicans would have serious repercussions for districts across the state.

Sen. Sandra L. Pappas, the chairwoman of the education committee in the Senate, where Democrats hold the majority, questioned the wisdom of shifting so much education spending to the state when an economic downturn appears imminent.

"I think we could increase the shift [to the state], but I don't think a total takeover is that wise," Ms. Pappas said. "It means we're moving away from funding education with a fairly stable source of revenue—property tax—to less reliable income and sales taxes, which are growing very well right now, but there are signs that's slowing down."

Vol. 20, Issue 39, Page 15

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