Minnesota Ponders Ways To Revamp Finance System

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Spurred in part by the financial troubles of several districts where voters rejected tax proposals, the Minnesota legislature is expected to consider ways to revamp the state's school-funding scheme.

A group of business leaders, politicians, parents, and others brought together by the legislature released a proposal last month. The Minnesota Education Association and another task force made up of lawmakers are working on plans of their own.

These groups generally agree that the state should pay a greater share of education costs. The state nearly froze funding for its school-aid formula in three of the past four years, and a last-minute change to a 1993 education bill capped spending on programs such as special education and transportation.

Union officials and others have also called for revamping the property-tax system, which they say creates confusion and inequity by taxing property at different rates depending on its value.

"It's so complicated no one understands why their taxes go up but they don't see an increase in services," said Judy Shaubach, the president of the Minnesota Education Association.

But officials in Gov. Arne Carlson's office said he has not lined up behind any finance proposal. And the Governor made no mention of the finance issue in his State of the State speech last week, saying only that Minnesota was already spending a big chunk of its money on schools.

"Today, more than half of the state budget is returned to local governments; nearly all of the remainder is returned to people in the form of human services, health care, and education," he said. "All of us can be more efficient."

The Governor also said that he favors using more block grants to allow communities to make their own decisions about how to spend money--an idea that was also popular among the panelists who were appointed by the legislature.

Some school officials have expressed fear that changes in the system will not come soon enough--if they come at all.

The White Bear Lake school district, for instance, is expected to cut $4 million from next year's $40 million budget because a referendum seeking to extend last year's increase in property-tax rates failed. The cuts would be added to $3 million in reductions made this year by the 10,000-student district, located in a suburb of St. Paul.

Fair Share

The Coalition for Education Reform and Accountability, created by the legislature in 1993, released its first report last month, recommending that the state provide enough aid to pay for a "core education" in each district.

The money would be distributed through block grants that would free districts from most state mandates but require that schools meet performance standards. The group would also like to see the state take responsibility for support services like special education and Head Start.

The coalition also recommended allowing local school boards to increase tax rates by as much as 25 percent without holding a referendum, and to levy local income taxes.

Like the teachers' union, it said the property-tax system is "unnecessarily complex" and favors districts with high property values.

The M.E.A., which also has a representative in the coalition, is also pushing for a change in the relationship between property taxes and state aid to local governments. A consultant who reviewed the issue for the union noted in his report that it produces "strange variations in property-tax burdens from community to community."

"We don't believe the property tax itself is bad, but the system is flawed," said Ms. Shaubach, who said the union was weighing the consultant's suggestion for a one-class property tax at the local level.

The union is now talking with lawmakers "to see where the political will is," Ms. Shaubach added.

Vol. 14, Issue 18

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