MINNESOTA LEGISLATIVE ACTION—DISTRICT IMPACT
On Tuesday, September 3, we had a district Community Finance Committee meeting. Much of our agenda involved discussion of issues affecting the ROCORI School District from the Minnesota legislative session last spring.
Much information about the legislative session has been defined, updated and shared during the summer. Although there was a lot of activity during the session, there are four core financial areas that will most significantly impact the ROCORI District. Through all of them, beginning in 2014-2015, the legislature also changed the process for weighting student membership in effort to simplify and equalize the funding process. I would like to take some time to highlight the legislation.
LOCATION EQUITY AID
One area of legislative activity involved the creation of a new category of state aid to school districts called Location Equity Aid. In many ways, this aid is a reaction to activity in previous legislative sessions and was intended to assist the metro area schools.
Two years ago, the legislative session provided aid to small rural schools. The legislation provided additional funding to schools that had enrollment of about 800 students or fewer. This aid was intended to allow small, rural schools the ability to protect courses and programs that are hard to sustain with small enrollments.
As a response to the support for small schools, the legislative action this spring was targeted at helping larger schools. The location equity aid assumes that schools in the metropolitan area or are larger regional centers outstate experience unique costs and different economic pressures. As such, the schools in the seven county metropolitan area or schools in other parts of Minnesota with enrollments of 2000 students were offered location equity aid—aid intended to equalize the economic situations which are based on location.
In a future article, I expect to go through this issue more fully, but the ability to access Location Equity Aid means that, beginning in the 2014-15 school year, the ROCORI District can access $212 per pupil unit with a significant portion coming through state aid.
REFERENDUM/LOCAL LEVY OPTIONS
A second element of the legislative action involved adjustments to and allowances for referendum and levy authority. One specific issue for the legislature was to address the situation for school districts that are not able to pass a local referendum.
The legislature returned to a status that existed many years ago—and is similar to the authorities of towns and counties—giving school districts the ability to implement a local levy with a value up to $300 per pupil. In addition, the legislature applied a greater “equalization” formula to the levy so that less comes direct from the local level and there is a greater amount of state aid applied than in the past.
To be consistent with this approach, the legislature also allowed schools that currently have a voter-approved referendum levy in place to convert the referendum from “voter-approved” to board applied. The effect of this is to potentially place all school districts on the same base—the first $300 of levy authority (and the related state aid) can be determined by board action.
The overall effect of this action, however, is different in each different school district. Each school system has to examine the implications of the authority to determine what is right or appropriate for that particular system.
In the ROCORI Schools, the effects of Location Equity Aid and the Referendum conversion authority have to be examined together. Because of the way they impact the amount of state aid and local taxes, they are linked together.
As we studied the situation, with the assistance of the district financial advisors, the combination of Location Equity Aid and conversion of referendum authority had several effects. First, the district could access (in 2014-2015) a little more than $200,000 additional revenues. Second, a significant portion of the funding would come from the state rather than be applied at the local level. Third, while gaining additional revenue, the district could offer a slight reduction in local property taxes.
Several years ago, the legislature implemented a categorical revenue source called integration aid. The aid was based on school systems, and their adjoining neighbors, facing the challenge of integrating very diverse populations. The idea was to provide educational and integration experiences to help students better understand the other ethnic and racial populations in their area.
Although our numbers do not match the requirements of the original legislation, the diverse nature of the St. Cloud School District allows school districts in central Minnesota to access integration aid. We pursued the funds initially, but were told that the ROCORI District did not have the ability to secure the funds. Recently, however, we have been authorized to receive these funds.
The funds must be used in a fashion consistent with the plan of the St. Cloud Area School District and the other partner schools. We are currently working to meet those expectations.
The legislature, however, has shifted (again, beginning in 2014-2015) the emphasis of Integration aid to focus on reducing the academic achievement gap—supporting efforts to improve the performance of Minnesota’s diverse population groups that are experiencing lower graduation rates, lower student academic performance, lower attendance rates and higher dropout rates.
This state assistance will allow us to have more focused efforts on groups of students in the ROCORI Schools who are demonstrating academic needs. Although we will implement some structures this year, we will be following the state direction to frame the program next year to focus on the achievement gap.
ALL DAY KINDERGARTEN
The legislature, after years of extensive debate, authorized funding for all-day, everyday kindergarten beginning in 2014-2015. This state funding is a tremendous step forward for kindergarten education. It has been pursued for a long time as it shifts the emphasis from a part-time program and funding to full status.
Although this is an important state funding effort, it is not expected to have a significant financial effect in the ROCORI School District because we have offered a full-day option—on a tuition basis. Since we implemented full-day kindergarten, we have asked parents to fund the participation of their students by paying tuition.
With the state funding, tuition can no longer be required in the program. The effect for us is that the funding will shift from parents to the state—but there is not likely to be additional revenue to the district.
Each of these issues are very complex financial elements. I have introduced the concepts, but there is much more to each of these legislative actions. I expect to come back to the issues at later points in order to offer a little more explanation!