Minn. Governor Vetoes School Aid Measure

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Gov. Arne H. Carlson of Minnesota could have signed a $6.7 billion education finance bill last week.

Instead, the two-term Republican drew a line in the sand, vetoing the biennial funding bill because it lacked his proposal for $150 million in tax credits and deductions for school costs, including private school tuition.

While the veto does not affect most state school aid, hundreds of millions of dollars in special education and other so-called categorical funds are in limbo.

"If there's not a bill by July 1, we have to cut $61 million from our budget," said Marj Rolland, the budget director for the 47,000-student Minneapolis school district. That's because, like other districts, Minneapolis would lose not only current categorical dollars but expected increases for such programs.

The ensuing fiscal crisis also forced the Minnesota Department of Children, Families, and Learning to send layoff notices to 270 employees last week. The department's funding expires June 30, the last day of this fiscal year.

Far from nearing a settlement, the governor and Democratic leaders in the legislature appear to be digging in. The legislative session ended in May, and the governor must call a special session to revive the bill. He's not likely to do so, though, until some agreement has been reached.

"I'd say there's no time frame now for negotiations" said Brian Dietz, the governor's spokesman. Gov. Carlson's "strategy is to travel around the state and promote his tax credit for all Minnesota families."

Deductions Already Allowed

Minnesota already allows families to deduct up to $1,000 per child from itemized state income-tax returns for private school tuition and school supplies.

In the 1983 case Mueller v. Allen, the U.S. Supreme Court upheld the deductions, finding that they benefitted parents, not schools. But Gov. Carlson argues that only wealthy families benefit from the current deduction because they are the only ones who itemize their taxes instead of taking a standard tax deduction.

His sliding tax plan would give families making no more than $39,000 a dollar-for-dollar tax credit of $1,000 per child, up to a maximum of $2,000 per family, to help defray the costs of academic summer camps, computers, or private schools. Families would not have to owe taxes to receive a tax credit check from the state.

The governor's firm stance on the issue is linked to his own past, according to Mr. Dietz. As a poor youth growing up in the Bronx in New York City, Mr. Carlson won a full scholarship to the elite Choate private high school in Connecticut, graduating in 1953.

"It's a real rags-to-riches story," Mr. Dietz said, adding that the governor wants poor children in Minnesota to have a chance at private education as he did.

Mr. Carlson also wants to promote the same competition between private and public K-12 schools that exists in higher education. His plan would also triple the current tax deduction available to well-to-do tax filers.

Still, Mr. Dietz argued, "seventy-five percent of the benefits would go to public school parents."

That's hardly encouraging to opponents. They say the dollar-for-dollar credit would violate the state constitution's wall between public funds and religious schools, and is the wrong way to go about reforming schools.

The tax-credit concept, which some see as another twist on publicly funded education vouchers for private schools, was debated but never settled during this session's budget talks.

"It isn't just a matter of legislators being cavalier and obstinate, but there just isn't support for it," said Rep. Becky Kelso, a Democratic member of the education committee.

Minnesota's teachers' unions also oppose the measure.

"It's a step toward creating a Balkanized society, separated by religious beliefs, by skin color, by income level," wrote Presidents Judy Schaubach of the Minnesota Education Association and Sandra Peterson of the Minnesota Federation of Teachers in a joint column in the June 8 issue of St. Paul's Pioneer Press newspaper.

Good Debate

But Mr. Carlson is scoring some public relations points.

A poll last week by the Pioneer Press and Minnesota Public Radio found that 59 percent of 814 likely voters surveyed thought tax credits or deductions for private school tuition are a good idea.

Sixty-seven percent backed the proposal to help parents pay for educational summer camps and computers for their children.

And a laudatory column in the May 20 Wall Street Journal, whose editorial page strongly backs school choice, said that "school reformers would do well to focus their attention north to see how it all plays out."

All of the attention and debate on the topic of education for poor people is good for Minnesota, Rep. Kelso said. But as July 1 nears and there is still no K-12 budget, the debate will shift to the budget crisis, she said.

That's already happening in some state agencies and local school districts.

Robert J. Wedl, the commissioner of children, families, and learning, has promised to have a contingency plan in place by June 25 for services and staff positions in case the K-12 funding bill is not passed.

"We will be working round the clock to ensure that the short-term impact on the public, our employees, and schools is minimal," he said last week.

Minneapolis school officials, who must pass a budget by July 1, have three fiscal plans on the table. One continues the current funding levels. Another factors in an estimated $61 million loss if the categorical funds are not approved. A third includes a projected $10 million increase in state aid.

"It has a big impact on the kids," Ms. Rolland said. But "the adults can't get together and compromise and do the good things we teach kids to do."

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