Why do our schools receive less funding than other districts?

For the last ten years or more, Minnesota school districts have increasingly relied on local voter approved referendums to fund schools—this is according to a Department of Education School Finance Report. Most school districts collect millions of dollars from local voter-approved operating referenda. Cambridge-Isanti does not. C-I voters last approved a local operating referendum in 2004 and it expired in 2010 (during the Great Recession). So, the District has been going without a local operating referendum for more than a decade. That means going without an average of $6.1 million per year for the last 10 years. 

Up until 2010, the District had a healthy fund-balance or savings account because state funding formulas favored rural Minnesota, and the district budgeted conservatively. But after the Great Recession (from 2010-2013) the state froze education funding and the state even delayed school aid payments (forcing some districts to borrow short-term to cover payroll). So the District began deficit spending to avoid budget cuts. In essence, the District was using its savings account to pay for day-to-day expenses. This strategy can only work for a short time, eventually the savings are depleted. 

The District stopped spending from its savings in 2019 and has balanced its budget for three consecutive years by making budget cuts, totaling $8.5 million and eliminating 100 jobs. Class sizes have increased, student fees have increased, and we have lost highly qualified staff to other districts who have more stable funding and a local operating referendum.

The real problem is that the state counts on local school districts to pass local operating referendums, and C-I Schools is one district that doesn’t have one. The average operating referendum in Minnesota is $864 per student. Therefore, we receive on average $6.3 million less than other districts our size. In addition, we are leaving money on the table. If we had an operating referendum, the State would provide $500,000 in equalization aid to cover part of the cost. Those are state taxes our community is already paying (in sales and income taxes) that go to other communities because we don’t have an operating referendum. The district also receives less compensatory aid, doesn't qualify for integration aid and isn't part of the Q-comp/Alternative Teacher Professional Pay System — the latter two would require more local tax support. 

Here is an excerpt from the Department of Education School Finance Report (January 2021)

  • General education basic revenue has lost 10% ($658 per student) of its buying power compared to Consumer Price Index (CPI) adjusted inflation since 2003; 
  • State and local education revenue as percent of Minnesotans’ personal income has fallen from 4.4% in 2000 to 4.0% in 2021; with no inflation in the general education formula for Fiscal Year 2022 and Fiscal Year (FY) 2023, state and local education revenue as a percentage of Minnesotans’ personal income will decline further to 3.9 percent by FY 2023; as a result, total state and local revenue for preK-12 education will be $1.959 billion lower than it would be if the FY 2000 investment of 4.4 percent of personal income had been maintained; 
  • Since 2000, Minnesota has fallen in states’ ranking of educational spending per pupil and the average teacher salary has fallen below the national average. 

There’s an old saying, “You get what you pay for.” Minnesota is paying less today for education than in the 20th century as a percentage of our personal income and getting–at best–uneven results 20 years into the 21st century.