Minnesota school funding is on the November ballot. Here’s what to know

In Ely this year, district leaders reduced in-school time to four days a week to address budget shortfalls.

In Minneapolis, district leaders are proposing the closure of more than a dozen schools to make better use of limited funding.

In Carlton-Wrenshall, two districts voted to combine in order to better deal with financial and enrollment troubles.

In Duluth, where district leaders have had to make cuts three years in a row, superintendent John Magas volunteered to freeze his contract-guaranteed salary raise “in solidarity” with his staff and students.

“It’s about the math of school funding in Minnesota. (It) just doesn’t work right now,” Magas said. “Across the state, almost every district is in a very similar situation as Duluth.”

In fact, Duluth is one of more than 60 districts in Minnesota that are asking voters in November to approve referendums that would help pay for building improvements, maintenance and the day-to-day costs of keeping public schools open and functional.

But tax hikes are not the only ways school leaders are looking to bring money into districts this year. Lawmakers and education leaders are also putting a constitutional amendment on the ballot that would add money to district coffers without pulling more in taxes out of voters’ pockets.

Permanent School Fund

Part of the way Minnesota pays for its public schools is through something called a Permanent School Fund that has been in place for nearly 170 years. The fund relies on timber and mining lease revenue from trust land that is invested by the state and then distributed to school districts.

The fund is somewhere around $2.3 billion and growing by approximately 8 percent each year. But schools only receive interest and dividends, not capital gains, which means that the more than 500 schools and districts getting payouts from the fund are seeing only 2.5 percent of the fund’s value.

A bipartisan group of lawmakers wants to change that. During the last legislative session, lawmakers agreed to put a question on the ballot that would allow schools to get full access to the funds - a 4.5 percent return on investment instead of the current 2.5 percent.

The change would not raise the tax burden in Minnesota.

Kirk Schneidawind, who is executive director of the Minnesota School Boards Association, thinks it should be a clear win for voters.

“It’s an easy yes vote for folks because it doesn’t change your tax rates. It’s money that is sitting in this Permanent School Fund that is not being utilized effectively,” Schneidawind said.

If it passes, the measure would result in about $33 per pupil in extra income for students.

In Minneapolis, that would add another $900,000 to the budget.

In Duluth, if the measure passes, it would mean an increase of $280,000. That amount doesn’t fully address Duluth’s $12 million budget deficit, but it would help.

“(It) is nothing to sneeze at,” Magas said. “It’s better than a drop in the bucket.”

Fixing potholes, paying for diesel, hiring staff

Sen. Mary Kunesh has spent years working on the fund and moving forward with changes. She sees it as a way to generate additional money for students while preserving the core of the fund for the future.

“This is going to be a stable source of income for schools,” Kunesh said. “We have the ability to adjust it if the fund is not doing well…we are…using our fiduciary responsibility as legislators to use those dollars in the best way to fund public education.”

Kunesh points out that, unlike some other forms of state funding, the increase in revenue from the fund can be used however districts want, whether it’s to hire more staff, pay for the spike in diesel fuel or fix potholes in the school parking lot.

“They can make long-term plans how to use those dollars or they can use it for short-term fixes. There are no strings attached to this money. The school districts can use these dollars as they best choose.”

Kunesh said, in trying to understand the fund and how best to use it, she also reached out to Minnesota tribal leaders since much of Minnesota’s trust lands are located on reservations. But the state’s four Bureau of Indian Education schools don’t receive income from the fund.

“This is just a little bit tricky,” Kunesh said, adding that she’d considered a proposal that would change the way BIE schools are funded, but instead decided to “just do one thing at a time here.”

The current plan would focus on amending the fund revenue for public schools, but, if it passes, Kunesh believes there will be political support to increase BIE funding in a corresponding amount through the general fund. She’s checked in with Minnesota tribal leaders about the plan and said they’ve given their approval.

“I did get letters of support back,” Kunesh said. “They realize that this is really kind of a work in progress.”

The senator hopes people will take the time to understand the fund and fill in the “yes” bubble on their ballots.

“Don’t leave it blank because if it’s blank, it counts as an automatic no,” Kunesh said. “If we don’t pass this, that’s millions and millions of dollars laying on the table for students.”

‘Understand the distinction’

Scott Croonquist, who leads the Association of Metropolitan School Districts, supports the amendment to the Permanent School Fund. But he doesn’t want voters to lose sight of the other funding measures they might find on their ballots in November.

“It’s a very modest increase in revenue from the Permanent School Fund and really, in no way does it come close to taking away from the importance of an operating referendum or, you know, a capital project or bond referendum,” Croonquist said.

In Duluth, for example, if the amendment passes but the referendum fails, the district would face another $12 million in cuts over the next two years.

“We hope people become knowledgeable about it (the Permanent School Fund) and vote the way that they feel they should, but it will not solve our structural deficit issues,” Duluth superintendent Magas said.

“When we think about funding schools, we want to make sure that we have what we need because the schools not only prepare our students for the future and also we’re one of the largest employers in the area,” Magas added.

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