Tuesday, September 1, 2009

Held Back

Each child who walks into a Minnesota classroom next Tuesday represents a unit of state education funding, known as the "per pupil" allowance. A school's general education revenue is calculated by multiplying the per pupil allowance by the "average daily membership" of the school; that is, by the average school enrollment over the course of the year. Because enrollments can vary over the course of the year, the state holds back a percentage of state funding until the beginning of the following school year, when enrollment numbers for the previous year have been finalized.

In the past, the state "hold back" has generally been between 10% and 15%. This year, because of the state's budget crisis, Gov. Pawlenty has increased the hold back to 27.5%. This amounts to $1.8 billion in delayed payments to Minnesota schools.

For every $100 a school district spends, state funding on hand only pays $72.50. The state pays the remaining $27.50 in the following fiscal year, but in order to meet its immediate obligations, school districts need to draw upon a line of credit.* The interest on that line of credit becomes part of the school's operating budget. Money that should be going to the education of children must now be budgeted to make interest payments on loans. To balance the state budget, and maintain his inflexible stand against raising taxes under any circumstances, the governor is using accounting sleight-of-hand to take money out of the classroom.

*For charter schools, the 27.5% hold back creates an additional problem. Under state law, charter schools must lease their school facilities. Because the state prevents charter schools from owning real property, the schools lack collateral to secure a loan. Charter schools also lack the ability to raise local property taxes, as traditional public schools often do to meet budget shortfalls.


Jim H. said...

This whole business of school funding makes my head spin. It oughtn't be so complicated.

Here's a stupid question: Wouldn't it be possible for a school to actually spend a little less than the state per-pupil allocation, thereby avoiding debt?

Waaaay back when I was an undergraduate education major, my senior project was on school funding in Indiana. It was a crazy mish-mash of local property taxes, sales taxes, and state subsidy or 'equalization' payments (designed to help the poor districts catch up a little with the rich ones). Minnesota's 21st century funding seems a lot like that Indiana system, which had been cobbled together in the 19th century, with a couple of awkward additions in the 20th. Not a state to emulate, in my opinion.

Jim H. said...

and nice double-entendre in the title.

Christopher Tassava said...

Ugh. This makes me feel sick. I wish I'd known this before - it goes a long way toward making me feel less put-upon for having to buy so many school supplies. Is there any way to remedy this, or is it such a macro-level fix that it'll never happen?

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