Borderland's top politician wants more state school funding/lower property taxes

In the past decade, Minnesotans went from spending $1 billion annually on education via their property taxes to $2.3 billion last year.

The evolving plan is still in the development and discussion stage. Bakk said he’ll consult his colleagues as the session starts this week to rally support for the massive enterprise.

Some aspects, he said, of the complicated overhaul will require establishing a funding system for deciding on the correct amounts of state contributions to school districts or deciding where the money will come from. Other questions include how will it be divvied up exactly, such as per pupil, and what process will be used to ensure students receive the same exemplary education opportunities.

Bakk said this is an effort, in part, to significantly reduce what’s become school districts’ almost complete reliance nowadays on levies and referendums to fill operational budget gaps, repair facilities or add amenities. Only about 40 of Minnesota’s more than 500 school districts do not have levies, he said.

The problem, he and other education experts said, is that school districts with sparse populations – like International Falls and Koochiching County – in regions with tax-free state lands and other factors have created a hodgepodge school funding system across the state.

As a result, rural homeowners who tend to earn less than their metro counterparts end up paying some of the state’s highest property tax rates while at the same time their children’s school districts often remain the least funded and most under-performing.

“It’s a pretty high priority to me. And it’s largely an equality issue,” said Bakk, who now represents Borderland thanks to redistricting. “No matter where you grow up, you should have the same advantages as anyone else.”

Bakk’s solution is still evolving, he said, but basically his idea is for the state Department of Education to match its mandates and increase funding in order to put all schools on relatively equal footing, he said. However, Bakk also noted he wouldn’t go so far as to remove a school district’s ability to levy, just hopefully greatly lessen the need for them.

The problem is that levies, along with a host of other regional factors, are playing an increasing role in raising property taxes, he and other experts said.

He’ll push for a “revenue-neutral” state school funding distribution plan, hopefully, with the help of the House and governor, he said. It likely will rely on raising revenues, perhaps through a few modest new taxes, but wants to hear from House leadership first.

“It certainly will be in the mix,” said House Education Finance Committee Chairman Paul Marquart, DFL-Dilworth, Minn, about education funding reform during the session that began Tuesday. “A big part of what we do will be lessening education’s reliance on property taxes.

“No one should have the quality of their education determined by their zip code.”

He and other Democratic lawmakers and local school officials said they expect resistance from Republican-dominated Twin Cities’ suburban legislators, many of whom represent some of Minnesota’s best-performing, most-modern schools. Those also tend to be areas with dense populations, much higher tax bases and less tax-free public or agricultural lands.

He said whatever additional funds the state provides will have to come from the general fund, “so we will need to find some revenue” and figure out what they can afford.

“A lot of critics will characterize this in general as a tax increase,” Bakk said. “My argument is no matter how it’s paid for, it’s all coming out of your pocket.

“And I think most Minnesotan’s agree, education should be a state responsibility. Schools shouldn’t have to beg for money to pay for their K-12 education.”

Bakk said part of his motivation came from the fact that now more than 90 percent of the state’s school districts use levies, including I. Falls.

Rural school districts tend to ask for levies to cover basic operation expenses in the face of increased fixed costs such as fuel, inflation and employee medical coverage, said he and Marquart.

Bakk mentioned, though, that Littlefork-Big Falls School District was unable this past election to pass a $545,823 operational levy. Meanwhile, I. Falls’ voters approved a levy that comes out to about $600 per student. But the district fought for years without success for that funding, he noted.

“He should be commended,” said L-BF Superintendent Fred Seybert. “I think it’s a great idea. The Constitution says education is a state responsibility, and it should not come down to how much money a county or school district has. That’s not equal.”

I. Falls’ levy dollars accounted for 14.5 percent or $1.9 million of the district’s budget last year. Meanwhile, the state’s contribution has only grown by about $400 per student over the past decade, said district Superintendent Nordy Nelson in explaining the need for change.

Taking into account the referendum, state funding, federal dollars and special education monies, I. Falls receives about $7,800 per student, Nelson said.

Meanwhile, Bakk said there are Twin Cities’ school districts so good at passing referendums they’re lobbying lawmakers to lift the state levy cap of $1,800 per student.

Senate minority leader Sen. David Hann, R-Eden Prarie, Minn., reportedly disagrees with Bakk’s approach, saying devoting more statewide money to education won’t necessarily improve it.

“He’s really going to have a challenge in putting something into place that would be fair to all school districts,” Nelson said.

Part of the current sticky situation stems from the last major educational overhaul made in 2001 when the state agreed to provide the first $415 for successful levies, Marquart and Bakk said. The next year districts raised more than $500 million from referendums.

The state has also state fallen behind on its per-pupil annual contribution to all school districts, which is about $5,200 now. Marquart said state aid only covers half the cost of inflation, which is a leading reason for many referendums.

Part of the problem for rural communities like Koochiching County is that homeowners have to pay more in property taxes because about 70 percent of the county is made up of state and federal lands, which don’t pay taxes.

In addition, rural areas like Koochiching County have a great deal of vacation homes whose owners, along with ag land, have been exempt from having to contribute to school levies as part of the 2001 deal.

The Twin Cities — with its wealthy home and commercial tax bases and dearth of tax-free public lands – was able to jump ahead of the rest of the state, experts said.

Since then, the spending disparity between the fifth and 95th performance percentile of school districts has increased by 67 percent, Marquart said. And homeowners’ share on average of education spending has risen from 12 percent to 20 percent today.

Considering the amount of tax-free public lands, number of vacation homes and levies, the average county homeowner pays higher property taxes than their urban counterparts, confirmed Koochiching County Auditor/Treasurer Bob Peterson. Per home tax figures were not immediately available.

Bakk could say he knew a Koochiching County resident with say a $100,000 home pays more – by comparison – than someone with a home of the same value in the Twin Cities metro.

“This is just bad public policy,” Bakk said. “Minnesota and International Falls needs significant property tax relief.”

The governor has prepared a task force report on overhauling education financing, lawmakers noted. With Gov. Mark Dayton at the helm, the Senate and House also has a DFL majority now for the first time in recent memory. “The stars are lined up now,” Bakk said for lasting change.

Bakk said bringing vacation or seasonal homes, many of which are luxurious, into the tax mix could really add to the county’s tax capacity and lift some of the burden off of Koochiching County’s working families.

The county’s population also is aging and in shrinking, while schools – full or not – are still needed and come at a price just to keep the lights on, officials said. Koochiching County has about 13,000 residents, which is down by 5,000 over the past few decades, according to the U.S. Census Bureau.

Meanwhile, the number of I. Falls’ pupils – and with them state tax dollars – has gone down by at least 25 percent in 10 years. By contrast, the Twin Cities keep growing, and most of Minnesota’s residents live there.

“When you go to Edina, (Minn.,) it’s night and day what they have compared to us, what they can afford,” said Local 331 president and Falls High School teacher John Sandberg. “I’m glad he (Bakk) is trying to do something. I know it’s been looked at for the past few years but hasn’t gotten off the ground. It’s very important.”