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State's K-12 Education Cuts Run Deep

April 26, 2010 By Jeff Van Wychen, Fellow and Director of Tax Policy & Analysis

!! Note !!

For more recent data, please see the January 2011 report.

Download Report:  District-by-District School Funding Trends (pdf)

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State education policy of the last eight years has been unkind to Minnesota's public schools and property taxpayers.  Real school revenue has fallen at the same time that school property taxes have increased.

These dismal trends began in school fiscal year 2003. During the 2002-2003 school year, the State of Minnesota eliminated all general education property taxes by shifting the entire cost of general education into the state's general fund.  Property taxes plunged and statewide real (i.e. inflation-adjusted) per pupil school operating revenue reached a level not seen before or since.  All was well in the Gopher State-or so it appeared.

With the election of a "no new tax" governor and an all-too-compliant legislature, the state was unable to maintain its commitment to K-12 education.  As a result, per pupil state operating dollars for K-12 education fell. 

The decline in state education funding has had two serious consequences. First, school property taxes have increased in an attempt to replace diminishing state dollars. Statewide, school operating levies will increase by $921 (140%) per pupil in constant 2011 dollars from FY 2003 to FY 2011. Second, because this levy increase is not sufficient to make up for the $1,278 drop in state funding, the total dollars available to pay for the operation of Minnesota schools is projected to fall by $357 per pupil (3.5%).

Between FY 2003 and FY 2011, real school operating revenue is projected to fall for 277 of Minnesota's 337 school districts.  In over two-thirds of districts, the revenue loss will be in excess of five percent, even after factoring in property tax increases.  Minnesota 2020 has compiled information on the real per pupil change in school operating revenue, levy and state aid for every Minnesota school district. This information can be found online at

For property taxpayers, the news is not all bad.  While real school operating levies have soared since FY 2003, they are still considerably lower than in FY 2002-the year before the elimination of general education property taxes.

However, there is no silver lining for K-12 education.  Current spending per pupil in Minnesota K-12 public schools has fallen below the national average.  Funding has declined at the same time that school districts are struggling to deal with increased concentrations of non-English speaking and special needs students.  As new testing requirements and performance standards are foisted upon school districts, they're being asked to do more with less.

State Economist Tom Stinson and State Demographer Tom Gillaspy have attributed Minnesota's economic success over the last half century to smart investments in education.  Our future prosperity is jeopardized if we short-change our investment in tomorrow's workforce by continuing to cut funding for schools.

Since 2002, Minnesota has cut taxes and other revenue from state and local sources more than any other state in the nation to the point where Minnesota's total public revenue and spending as a percent of personal income has fallen below the national average.  This being the case, now is the time to consider increasing public revenues in order to avoid even deeper cuts to K-12 education.

Furthermore, additional revenue should come from progressive state taxes, such as the income tax, which are based on taxpayers' ability to pay, rather than on regressive property taxes, which fall hardest on low and moderate income families who are already over-taxed relative to higher income households.

Despite past cuts, funding for education could again be on the chopping block as the legislature and governor struggle to deal with the state's deficit.  Rather than relying on the double whammy of increased school property taxes and reduced school funding, state leaders should turn to an increase in progressive state revenues to address the state's ongoing budget mess and to ensure Minnesota schools can provide a quality education for our children.

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