How are public schools funded in Minnesota?

The Minnesota Department of Education sets formulas and guidelines for school district revenue. The only portions of revenue for which there is local control are local operating referendum funds and local fees. As a general rule, school districts can’t use funds from other designated areas (like Food Service or LTMF) to fund day-to-day school expenses.

In Minnesota, school funding is a shared responsibility among local, state and federal funding sources. Here is a short explainer video:

Cambridge-Isanti Schools receive less local, state and total revenue per student than the average Minnesota school district. Data released in August 2021 show that for the current school year, 2021-2022, Cambridge-Isanti Schools per-student funding ranks #311 out of 327 Minnesota school districts.  

On average districts receive about 20% of their operating budget from local property taxes, only 10% of the Cambridge-Isanti operating budget is funded by local property taxes. Cambridge-Isanti is more reliant on state funding as its primary source of revenue, which totals 84% of the operating budget.

The largest portion of a school district’s budget is the Operating Budget, which is funded by the state’s General Education Fund Formula. The Operating Fund provides teachers, classroom supplies, co-curricular, and utilities—all the day-to-day operations of a school. When we discuss budget reductions, the district is focusing on the operating budget.

The district has other funds (or buckets) that are strictly regulated or restricted. For example, there is the Food Service Fund, which is largely funded by the Federal Student Nutrition Program and families who pay for lunches. This fund must be self-sustaining and break even every year. Student nutrition staff, custodial services and some lunch-time supervisory staff are paid through the Food Service Fund.

Long-Term Facilities Maintenance Funds (LTFM), or building funds, are another fund that is tightly regulated and those funds can typically only be used for buildings.

Community Education (Fund 04) is outside the District’s general operating budget. Like the Food Services fund, it must be self-sustaining and receives a small local levy and fees from programs and services.

School Funding in Minnesota is complex and most people think the system is broken. The latest report from a School Finance Work Group called for changes, but the legislature could not agree on what changes to put into law. The work group reported a large disparity between top-funded districts and the bottom 10% — primarily due to locally approved operating levies in other districts. (C-I Schools falls in the bottom 7% in the state for school funding and does not have a voter-approved operating levy.)

Learn more: Legislator’s Guide to School Finance (PDF)