Transcript Document

Education Finance
Eric L. Nauman,
Fiscal Analyst
[email protected]
296-5539
7/7/2015
1
Table of Contents
Constitution, Trends, Basic Terms
Education Budget: Aid
Property Taxes: E-12 Property Taxes in Context
“The Big Plan”: A Brief Look Back
E-12 Levy Trends and Components Over Time
What About the Operating Referendum?
Percent of Districts That Have One
Ballot Question Trends Over Time
Approval Percentages Over Time
Shifts
Where to Get More Info/Questions
7/7/2015
2
Education Finance: Constitution
“The stability of a republican form of government depending mainly
upon the intelligence of the people, it is the duty of the legislature
to establish a general and uniform system of public schools. The
legislature shall make such provisions by taxation or otherwise as
will secure a thorough and efficient system of public schools
throughout the state.”
-- MN State Constitution, Article 13, section 1
3
7/7/2015
Basic Terms: Revenue/Levy/Aid
Revenue
Funds available for school districts to spend
Levy
Revenue raised from taxation on property in a school district
Aid
Aid provided by state legislature to school districts
Rule of Thumb
REVENUE = AID + LEVY
7/7/2015
4
Basic Terms
ANTC
Adjusted Net Tax Capacity = The tax base used in many K-12 formulas
to measure the relative wealth of property in each district.
RMKV
Referendum Market Value = The market value of all taxable property
in a district excluding seasonal rec and agricultural lands.
Fiscal Year
A 12 month budgeting period. For school finance & the state of MN, a fiscal year
begins July 1 and ends June 30. School year 2011-12 is the same as FY 2012.
Equalization
The process of reducing the impact of property wealth to generate revenue
for school districts by appropriating state aid. State aid is appropriated in
higher amounts for districts with relatively less property wealth.
Equalizing Factor
A statutorily determined amount of tax capacity per pupil that
determines the amount of aid and levy in a given district. Districts
with tax base above the equalizing factor receive no aid.
7/7/2015
5
Education Finance: Trends
Number of School Districts & Charter Schools
FY 1998-2011
350
353
350
347
345
343
343
343
343
343
340
340
340
337
337
300
250
200
136
150
100
50
29
43
53
65
69
2001
2002
81
143
131
153
154
148
110
93
0
1998
1999
2000
2003
2004
2005
School Districts
7/7/2015
2006
2007
2008
2009
2010
2011
Charter Schools
6
Education Finance: Trends
Total Minnesota School Enrollment
FY 1998-2011
855
(in thousands)
850
845
840
835
830
825
820
815
810
805
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total Public Enrollment, Actual
Total Public Enrollment, MDE Projections
Minnesota Department of Education Data
7/7/2015
7
Education Finance: Trends
Minnesota Charter, Home School, & Nonpublic Enrollment
FY 1998-2011
(in thousands)
100
90
80
70
60
50
40
30
20
10
0
1998
1999
2000
2001
2002
Charter School
2003
2004
2005
2006
Nonpublic
2007
2008
2009
2010
2011
Home School
Minnesota Department of Education Data
7/7/2015
8
Education Finance: Trends
Minnesota Teachers (FTEs)
FY 1998-2011
(in thousands)
60.0
50.0
40.0
30.0
20.0
10.0
0.0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Teachers (Total FTE)
Pre K - Elementary
Secondary
Special Education
2009
2010
2011
Minnesota Department of Education Data
7/7/2015
9
Education Finance: Trends
Education Spending by Type of Revenue
FY 1998-2015 (projected )
(dollars in millions, based on Nov '11 Fcst)
12,000
Millions of dollars
10,000
8,000
6,000
4,000
2,000
1998
7/7/2015
2000
2002
2004
2006
2008
2010
2012
2014
Prop Tax
Oth Rev
State Aid
Federal Aid
Credits & Oth Aid
Total
10
Education Finance: Trends
Education Revenue Composition
FY 1998-2015 (projected)
(based on Nov '11 Fcst)
100%
90%
2%
4%
5%
5%
5%
5%
5%
7% 1%
6%
6%
8%
8%
7%
7%
1%
6%
1% 1%
7% 7%
1%
6%
1% 1%
6% 6%
7%
8%
9%
9%
8%
1%
1%
13% 8%
1%
6%
1%
6%
0%
6%
0%
6%
7%
7%
7%
7%
80%
Percent of Total
70%
60%
50%
40%
8%
8%
30%
20%
7%
10%
8%
7%
7%
0%
1998
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2000
2002
2004
2006
Credits & Oth Aid
Federal Aid
Oth Rev
Prop Tax
2008
2010
2012
2014
State Aid
11
Education Finance: Aid/Levy Split Policy



The higher a district’s property value, the more revenue is raised through
levy
For a given amount of revenue the poorer district will receive a greater
percentage of state aid/the wealthier district will receive lesser amounts of
state aid
Formula Examples: Operating Referendum, Operating Capital, Equity,
Transition, Qcomp, Debt Service
Rev Value Per Pupil
Example:
1000
900
800
700
600
500
400
300
200
100
0
Dist
#1
State Aid
Property Tax
Levy
Dist
#2
Dist
#3
Dist
#4
Dist
#5
Increasing Property Value Per Pupil
Dist
#6
12
7/7/2015
Education Finance: Aid
Source: Department of Management and
Budget, Nov ‘11 Fcst
13
Education Finance: Aid
Source: Department of Management and
Budget, Nov ‘11 Fcst
14
Education Budget
Source: Department of Management and
Budget, Nov ‘11 Fcst
15
Education Finance: Property Taxes
MN Property Taxes by Source
Pay 2011 Final
Counties
33%
Schools
27%
Cities
23%
Other
73%
Towns
3%
Total = $8,118.7 million
7/7/2015
Special Tax. District
4%
State Gen Levy
10%
16
Education Budget: Property Tax Tracking
By Fund, FYs 12-15
E-12 Property Taxes
(in millions)
General Fund
FY 2012
FY 2013
FY 2014
FY 2015
1,308.7
1,347.9
1,389.6
1,414.4
Community Service
Fund
75.1
75.6
75.7
77.2
Debt Service Fund
804.3
813.0
831.9
854.0
59.8
65.8
68.5
69.5
2,248.0
2,302.3
2,365.7
2,415.1
(72.9)
(15.1)
(14.3)
(14.3)
2,175.2
2,287.2
2,351.4
2,400.8
OPEB/Pension Debt Svce
Total Schl Dist Levies
Credits & Adj
Total Certified Levies
Based on Nov 11 Forecast
MN State Senate Fiscal Staff
17
“The Big Plan”: A Look Back
2001 Education Reform
General Education Property Tax Replaced with State Aid
Levy = $1.3 billion; Total State Cost $880 million after “netting”
credits from education homestead credit.
Supplemental & Transition Revenue programs “rolled” into
Referendum Authority.
$415 per pupil of referendum authority transferred to GenEd formula
allowance.
$120 million of Referendum, Supplemental, & Transition Levy
Replaced with State Aid.
FY 2002 GenEd
& Ref Rev. Source
Property
Tax
33%
7/7/2015
FY 2003 GenEd &
Ref. Rev Source
Property
Tax
4%
State Aid
67%
State Aid
96%
18
FY 2013 GenEd &
Ref. Rev Source
Property
Tax
14%
State Aid
86%
Based on Nov 11 Fcst.
Education Finance: Property Taxes
Total Education Property Tax Levies,
FY 2002 - FY 2003
(Dollars in 000s)
3,000,000
2,500,000
2,000,000
1,933,513
1,500,000
986,425
1,000,000
500,000
0
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
Data based on Based on Nov 11 forecast . Levies for FY 13 and later are projections.
7/7/2015
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Education Finance: Property Taxes
Total Education Property Tax Levies,
FY 2002 - FY 2015
(Dollars in 000s)
3,000,000
2,500,000
2,000,000
2,066,887
1,933,513
2,132,899 2,175,179
2,287,244
2,351,3622,400,788
1,918,564
1,774,240
1,612,787
1,375,745
1,500,000
1,191,464
1,283,310
986,425
1,000,000
500,000
0
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
Data based on Based on Nov 11 forecast . Levies for FY 13 and later are projections.
7/7/2015
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Education Finance: Property Taxes
Education Property Tax Trends
FY 2002 - 2015 By Fund/Category
(Dollars in 000s)
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
(200,000)
(400,000)
(600,000)
General Education
OpRef & Cap Proj
Credits
Comm Svc & Debt Svc Fund
OPEB Debt Service
Data based on Based on Nov 11 forecast . Levies for FY 13 and later are projections.
7/7/2015
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Education Finance: Operating Referendum
Percent of Districts with Operating Referendum Authority
FY 1986 - 2013
100.0%
89.2%
90.0%
90.2%
88.1%
80.0%
70.0%
60.0%
50.0%
47.1%
40.0%
30.0%
20.0%
10.0%
0.0%
Minnesota Department of Education Data
7/7/2015
22
Education Finance: Operating Referendum
Percent of Districts with Operating Referendum Authority
FY 1986 - 2013
100.0%
89.2%
90.0%
The Bauerly
amendment
80.0%
Gov Ventura’s
“Big Plan”
90.2%
88.1%
70.0%
60.0%
50.0%
47.1%
40.0%
30.0%
20.0%
10.0%
0.0%
7/7/2015
23
Education Finance: Operating Referendum
Operating Referendum Questions,CYs 1991 - 2011
250
207
200
147
150
132
111
100
83
69
50
45
32
53
56
27
64
39
61
1993
64
1995
86
68
138
78
107
72
47
50
1997
1999
Proposed Questions
7/7/2015
71
61
47
2001
78
77
44
22
0
1991
71
108
106
89
49
53
117
2003
76
33
2005
30
2007
49
2009
47
2011
Passed Questions
Minnesota Department of Education Data
24
Education Finance: Operating Referendum
Percent of Op Ref Questions/Dollars Approved by Calendar Year
90.0%
80.0%
70.0%
73.6%
66.7%
65.7%
60.0%
49.4%
50.0%
72.2%
30.0%
20.0%
62.8%
57.6%
55.0%
40.0%
72.8%
79.9%
44.1%
38.4%
66.7%
65.9%
39.5%
60.5%
47.5%
37.3%
54.9%
62.0%
10.0%
0.0%
CY 2001
CY 2002
CY 2003
CY 2004
CY 2005
% of Questions
CY 2006
CY 2007
CY 2008
CY 2009
CY 2010
% of Dollars
Minnesota Department of Education Data
7/7/2015
25
Education Finance: Operating Referendum
Operating Refendum Aid as Percent of Revenue
FY 1986-2013*
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Percent Aid
7/7/2015
*Includes Tax Base Replacement Aid. Projections for FY 2012 and FY 2013.
Minnesota Department of Education Data
26
Education Shifts
60/40
7/7/2015
27
Basic Terms
Aid Entitlement
100 percent of the state aid a district or a charter school is eligible
to receive in a given fiscal year. Aid may actually be paid in a
separate fiscal year
Current Payment
The percentage of an entitlement that is paid in the fiscal year in
which the state aid is generated.
Final Payment
The percentage of an entitlement that is paid in the fiscal year after
the state aid is generated. Difference between prior year’s
entitlement and that year’s current payment (MS127A.45, subd. 9).
Payment Schedule
A schedule which expresses the amount of education aid entitlements
that are paid as a “current” payment and the amount that is paid as
a “final” payment. Must add to 100%.
Appropriation (Education Context)
7/7/2015
The amount of state aid that the state pays to districts and charter
schools in a given year. In most cases, an appropriation consists of a
portion of an aid entitlement from the “current” fiscal year and a
“final” payment from
28 an aid entitlement from the prior fiscal year.
Basic Terms
Payment Shift
An adjustment to the balance of current and final payment
percentages which constitute the state aid appropriation made
to schools.
In an “unshifted” environment, school aid payments are comprised
of a combination of 90% of the current year’s entitlement added
to 10% of the prior year’s entitlement.
The appropriation is metered to schools in 23 payments
throughout the year – roughly every two weeks
Beginning in FY 12, the aid payment shift percentage is 60/40.
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29
E-12 Programs on Payment Schedule
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
7/7/2015
General Education
Abatement Aid
Consolidation Transition Revenue
Nonpublic Pupil Aid
Nonpublic Pupil Transportation Aid
Compensatory Formula Aid
Charter School Building Lease Aid
Charter School Start-Up Aid
Integration Aid
Literacy Incentive Aid
Success for the Future
Tribal Contract Schools
Special Education – Regular
Special Education – Excess Cost
Travel for Home-Based Services
Transition Programs – Students with Disabilities
Health and Safety Aid
30
E-12 Approps on Payment Schedule
•
•
•
•
•
•
•
•
•
•
•
•
•
7/7/2015
Debt Service Equalization Aid
Alternative Facilities Bonding Aid
Deferred Maintenance
Basic Support Grants for Libraries
Multicounty, Multitype Library Systems
Regional Library Telecommunications Aid
School Readiness
Early Childhood Family Education Aid
Health and Developmental Screening Aid
Community Education
Adults with Disabilities Program Aid
School Age Care Aid
Adult Basic Education Aid
31
School Payment Shift
Mechanics of Payment Schedule (Without Shift)
Fiscal Year
Entitlements
2009
$100
2010
$100
90%/
10%
90%/
10%
2011
$100
2012
$100
2013
$100
(amounts generated by
formula)
Payment
Schedule
90%/
10%
90%/
10%
90%/
10%
Current Payment $90
$90
$90
$90
$90
Final Payment + $10
+ $10
+ $10
+ $10
+ $10
$100
$100
$100
$100
Appropriations
7/7/2015
$100
32
School Payment Shift
Mechanics of Aid Payment Shift (2010-11 biennium & Feb 2011 Fcst law)
Fiscal Year
Entitlements
2009
$100
2010
$100
90%/
10%
73%/
27%
2011
$100
2012
$100
2013
$100
(amounts generated by
formula)
Payment
Schedule
70%/
30%
90%/
10%
90%/
10%
Current Payment $90
$73
$70
$90
$90
Final Payment + $10
+ $10
+ $27
+ $30
+ $10
$ 83
$97
$120
$100
Appropriations
$100
Entitlements: Under a payment shift, there is not adjustment to entitlements. A payment
shift creates a delay of WHEN schools receive aid. It does not reduce the amount.
7/7/2015
33
School Payment Shift
Where We’re At Today (2011 E-12 Education Bill)
FY 2010-11 Biennium
Fiscal Year
Entitlements
2009
$100
2010
$100
90%/
10%
73%/
27%
2011
$100
FY 2012-13 Biennium
2012
$100
2013
$100
(amounts generated by
formula)
Payment
Schedule
70%/
30%
60%/
40%
60%/
40%
Current Payment $90
$73
$70
$60
Final Payment + $10
+ $10
+ $27
+ $30
+ $40
$ 83
$97
$90
$100
Appropriations
$100
Confusing Comparison: The shift percentage in FY 2012 is 10 percentage points lower
than the prior year, BUT is 30 percentage points lower than the Feb Fcst for FY 2012.
7/7/2015
34
$60
Basic Terms
Property Tax Recognition Shift (PTRS)
A PTRS is an accounting entry that takes a portion of a district’s
property tax revenue and moves it back one year. (ie. PT
revenue that would otherwise be revenue in FY 2012 is shifted
into FY 2011)
The second step is to reduce state aid in an amount equal to the
property taxes shifted forward. This generates one-time
savings.
The current PTRS was enacted by the legislature in 2010.
The amount shifted will grow over time as property
taxes grow.
7/7/2015
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Property Tax Recognition Shift
Calendar Year 2011
Prior to Change
May
Jan ‘11
July 1
Oct
Property taxes paid
Property taxes paid
Property tax revenue
recognized by districts
Property tax revenue
recognized by districts
School property taxes currently paid in two separate years, BUT prior to FY 2011 both May
and October payments were “recognized” by districts as revenue in the later fiscal year.
Rules governing recognition dates based on statute and UFARS.
7/7/2015
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Dec
Property Tax Recognition Shift
Prior
Legislative
to Change
Change – Creating a Shift
Jan ‘11
Step #1 –
Change Levy
Recognition
Calendar Year 2011
May
July 1
Property taxes paid
Property taxes paid
Property tax revenue
recognized by districts
Increase Levy Revenue by
$515 million * in FY 11
Step #2 – GenEd
Appropriation
Reduction
7/7/2015
Oct
Aid cut in FY 11 by
$515 million*
*Based on Nov 11 Fcst
37
Property tax revenue
recognized by districts
Dec
Contingent Shift Buy-Back

Because shifts have historically been used as a defacto
“budget reserve” a system was created in 2004 to pay them
back automatically. This law remains in effect today.

Shifts are paid back when the Commissioner of MMB
“determines that there will be a positive unrestricted
budgetary general fund balance at the close of the biennium.”

In order of precedence: (1) Cash flow account, (2) budget
reserve, (3) payment shift,(4) property tax recognition shift
and two other small payments.

This process used once already. Shifts from 2002 & 2003
sessions were paid back in two years. The Nov ‘11 forecast
repaid the cash flow account and nearly restored the budget
reserve.
7/7/2015
38
Contingent Shift Buy-Back
MS.16A.152 Budget Reserve and Cash Flow Accounts
If on the basis of a forecast of general fund revenues and expenditures, the
commissioner of management and budget determines that there will be a positive
unrestricted budgetary general fund balance at the close of the biennium, the
commissioner of management and budget must allocate money to the following
accounts and purposes in priority order:
(1) the cash flow account established in subdivision 1 until that account reaches
$350,000,000;
(2) the budget reserve account established in subdivision 1a until that account
reaches $653,000,000;
(3) the amount necessary to increase the aid payment schedule for school district
aids and credits payments in section 127A.45 to not more than 90 percent rounded
to the nearest tenth of a percent without exceeding the amount available and with
any remaining funds deposited n the budget reserve;
(4) the amount necessary to restore all or a portion of the net aid reductions under
section 127A.441 and to reduce the property tax revenue recognition shift under
section 123B.75, subdivision 5, by the same amount………..
39
7/7/2015
Contingent Shift Buy-Back
FY 2012 Contingent Spending If Paid
Back in FY 2012 Based on End-of-Session Estimates
(dollars in millions)
Cash Flow Account *
255
Budget Reserve*
653
E-12 Aid Payment Shift
Property Tax Recognition
Shift
2,125
565
State Airports Fund
15
Fire Safety Account
11
Total Contingent Spending
$3,624
* Nov ‘11 forecast allocated $255M to cash flow
account & $648 M to budget reserve.
7/7/2015
40
Education Finance
Education Shift Savings – A History of Legislative Changes
Fiscal Year
Type
Level
Amount When
Enacted (if known)
1983
PTRS
32%
($240.7 M)
1985
1988
PTRS
PTRS
24%
27%
shift reduced
shift expanded
1990
1992
1993*
1994
1996
1997
1997
1999
PTRS
PTRS
PTRS
PTRS
PTRS
PTRS
Payment
PTRS
31%
37%
50%
37.4%
18.1%
7%
90/10
0%
shift expanded
shift expanded
shift expanded
shift reduced
shift reduced
shift reduced
shift reduced
PTRS eliminated
2003
2004**
2004**
Payment
Payment
PTRS
83/17
80/20
48.6
( $437.5 M)
($185.3 M)
( $230.3 M )
*Previous shift high point in FY 1993, $688 million owed to schools.
**2004 the Legislature passed the contingent shift buyback language.
7/7/2015
41
Year Paid
Back
Partially in ’85, ’96-’99
1996-1999
1996-1999
1996-1999
Partially in ‘94
Nov. 2005 Fcst
Nov. 2005 Fcst
Feb. 2006 Fcst
Education Finance
Education Shift Changes – A History of Legislative Changes
Fiscal Year
Type
Level
Year Paid
Back
Amount When
Enacted
(if known)
2005
Payment
81.9/18.1
$116.3 M
Nov. 2004 Fcst
2005
Payment
84.3/15.7
$143.7 M
Feb. 2005 Fcst
2006
Payment
84.3/15.7
$355.0 M
Nov. 2005 Fcst
2006
PTRS
10.8%
$265.9 M
Nov. 2005 Fcst
2006
PTRS
0%
$72.9M
Feb. 2006 Fcst
2010*
Payment
73%/27%
2011*
PTRS
2011
2012
( $1,160.4M)
Based on pos fcst
48.6%
($561.5M )
Based on pos fcst
Payment
70%30%
($207.7M)
Based on pos fcst
Payment
60%/40%
($739.2M )
Based on pos fcst
* Shifts initially created by Gubernatorial unallotment process and subsequently codified into law.
7/7/2015
42
Questions/Discussion?
7/7/2015
43
Where to Get More Information
Senate Counsel, Research and Fiscal Analysis
http://www.senate.leg.state.mn.us/departments/office_bio.php?Is=85&office_id=10
07
Department of Education; Division of Program Finance
http://education.state.mn.us
Legislative Reference Library, K-12 Education Links to the
World
http://www.leg.state.mn.us/lrl/links/educat.asp
Department of Finance, Budget Information
http://www.budget.state.mn.us
7/7/2015
44
Where to Get More Information
Continued…
“Financing Education in Minnesota” is published annually by the Minnesota
House of Representatives Fiscal Analyst Department
http://www.house.leg.state.mn.us/fiscal/files/06fined.pdf
“Minnesota School Finance: A Guide for Legislators” is published by the
Minnesota House of Representatives Research Department
http://www.house.leg.state.mn.us/hrd/pubs/mnschfin.pdf
“E-12 Budget -- Education Finance Overview” is published every biennium by
the Minnesota Senate Counsel, Research and Fiscal Analysis Office
http://www.senate.leg.state.mn.us/departments/scr/presentations/index.php#header
7/7/2015
45
Minnesota Senate Education Staff
Nonpartisan Staff
Caucus Staff
Ann Marie Butler,
Counsel
651/296-5301
Ed Cook,
Majority Research
651/296-0129
Kent Hranicka,
Research Analyst
651/296-0558
Danna Elling,
DFL Research
651/296-7089
Eric Nauman,
Fiscal Analyst
651/296-5539
Greg Marcus,
Education Committee Administrator
651/296-5312
7/7/2015
46