State report reveals significant disparities in school funding across Minnesota districts

The Minnesota Senate's Committee on Education Finance convened on January 22, 2025, to discuss significant trends and disparities in school funding across the state. The meeting focused on the distribution of property tax rates and state aid, revealing notable variations among school districts.

The session began with a presentation highlighting the disparities in local property tax rates, noting that the district at the 75th percentile had a local NTC rate nearly double that of the district at the 25th percentile. This trend was echoed in market value levies, where the ratio between the 75th and 25th percentile districts was approximately 1.8. The discussion underscored the considerable variation in funding sources across districts.

Further analysis revealed that, for fiscal year 2025, the referendum market value per resident pupil for the district at the 75th quantile was nearly double that of the district at the 25th quantile. The committee examined general fund revenues per pupil, which have increased by 118% in nominal terms since 2003, with a 25% increase when adjusted for inflation. However, the committee acknowledged fluctuations in funding, particularly a temporary dip in fiscal years 2022 and 2023 due to high inflation rates.

Senator Farnsworth raised a question regarding the inflation-adjusted revenues, confirming that, on average, school district general fund revenues are indeed higher in 2025 than in 2003. The discussion clarified that this figure represents a statewide average, with individual districts experiencing varying changes.

The committee also reviewed the composition of school district revenues, noting that basic revenue accounts for approximately 68% of total general education revenues, with compensatory aids, referendum revenues, and local optional revenue making up the remainder. Over the past 25 years, the share of basic revenue has decreased, while the share of referendum and local optional revenues has increased.

A significant point of discussion was the reliance on local property taxes for funding, with the majority of revenues in the referendum and local optional programs being sourced from local taxpayers rather than state aid. This shift raises concerns about the ability of local taxpayers to sustain such funding levels.

The meeting concluded with a reference to the Minnesota Department of Education's General Education Revenue Disparity Report, which highlights revenue disparities among districts and offers recommendations for addressing these inequities. The committee expressed interest in further exploring these findings to inform future policy decisions.

Overall, the meeting underscored the complexities of school funding in Minnesota, emphasizing the need for ongoing evaluation and potential reform to ensure equitable access to educational resources across all districts.