Governors Education Finance Recommendations

Summary of Governor Pawlenty’s education finance recommendations for FY2006-2007.

The information below is a first glance summary and intended to provide you with background information on the Governor’s proposals. Further information on the impact of the recommendations will be provided in the coming weeks.

Overall the Governor is proposing a total education finance budget of $12.38 billion for FY06 and FY07. This includes an appropriation increase to the general education program of $238 million d a levy impact of $130 million in FY06 and FY07 and $330 million in FY08-09. These figures do not include increases or reductions in aid and levy for other non-general education programs (i.e. special education, adult basic education). More specific details will be available once House and Senate fiscal staff complete their analysis of the Governor’s budget.

General Education

Formula increase: The Governor is proposing a 2% increase in FY06 and FY07. The formula is increased by $92 in FY06 and by $102 in FY07.
Declining enrollment: The Governor is proposing to eliminate the marginal cost formula which helps school districts adjust for declining enrollment and replace it with a new formula described below.
Pupil weightings: The Governor is proposing to eliminate the pupil weightings, except for the .5 weighting for kindergarten and provide a new formula which is described below.
New declining enrollment and secondary pupil formula: Beginning in FY07 the Governor is proposing a new formula for declining enrollment and secondary education funding. Declining enrollment funding will equal $1297 times the decline in pupils from the previous year and the current year. Secondary education funding will equal $936 times the number of pupils in grades 7-12. According to the budget documents, districts will receive approximately the same level of additional funding.
Discretionary levies: The Governor is proposing to create a discretionary levy to replace a variety of levies, including reemployment insurance, safe schools, judgment, ice arenas, swimming pools, lost interest earnings, tree growth replacement, building leases, severance among and a few miscellaneous others. Training and experience will also be rolled into this levy. Districts that levied more than $74 per pupil (the state average) will be guaranteed a minimum of $76 per pupil. Districts levying less than the state average will qualify for an increase of up to $150 per pupil. The amount exceeding $76 per pupil is subject to reverse referendum.
Alternative compensation: The Governor is proposing to establish an alternative compensation program entitled Q Comp: Performance Pay for Quality Teaching. Districts must submit plans to the Department of Education and must meet certain criteria. The plan must provide multiple career paths, instruction-based accountability, professional compensation, ongoing professional growth, and alignment of staff development and set-aside funds. Funding for this program is through the general education program. The Governor is proposing an aid appropriation $16.7 million in FY06 and $62 million in FY07. School districts are also eligible for a $70 per student equalized levy.
Referendum cap and increased equalization aid: The referendum cap is increased from $965 to $1453, a $488 increase. For districts remaining on the grandfather cap, the inflationary increase in the cap is continued to be based on the CPI for FY09 and later. The limit for 2nd tier equalization is increased by 28% of the formula allowance.
Class size reduction revenue: The Governor is proposing to eliminate the requirement that school districts reserve a portion of their revenue for class size reduction purposes.
Equity revenue: The Governor is proposing a single formula, beginning in FY07. All districts below 28% of the formula allowance will qualify for revenue, including Mpls, St. Paul and Duluth and districts with no referendum revenue. The allowance is based on a sliding fee scale with a maximum allowance of $101 per pupil.
Transportation sparsity: Beginning in FY07, the transportation sparsity formula will be based on FY03 statistical data rather than 1995 data on population density and transportation costs per pupil.
De-link categorical formulas: Under current law funding for a number of categoricals (i.e. compensatory, sparsity) increases as the formula increases. The Governor is proposing to delink these categoricals from future formula increases and instead provide a 2% increase.
Transition revenue: The Governor proposes to recalculate transition revenue to ensure that districts receive a minimum guaranteed increase for FY07. This new transition formula will remain in place until 2010.

Special education
The Governor is proposing to increase regular special education revenue by 4%. This increase is provided by an equalized special education levy. Districts will also be allowed to allocate special education excess cost aid using prior year data instead of current year data. The Governor is also recommending changes to the special education tuition billing process to make it simpler and more uniform.

School facilities
Districts not eligible to participate in the alternative facilities program will be allowed to make an equalized levy for deferred maintenance.

Telecommunications access
The Governor is proposing the Equity and Telecommunications Access program to reimburse telecommunications costs to school districts. Aid equals 90% of approved FY05 expenditures adjusted for federal E-rate discounts exceeding $15 per pupil.

Get Ready, Get Credit
The Governor recommends an appropriation of $2.8 million in FY06 and $3.7 million in FY07 for this program which is aimed at preparing students for post-secondary education options. Funding is included for college readiness, opportunities for high school students to obtain college credit and funding of stipends and exam fees in the AP/IB program.

Career and Technical Education Grant and Levy
The Governor is proposing an appropriation of $2 million for the Minnesota Modular Career Education grant program. He is also proposing a new levy program beginning in FY08. Districts will receive the lesser of $80 times the districts average daily membership in grades 10-12 in which the fiscal year the levy is certified or 25% of the approved expenditures in the fiscal year in which the levy is certified.

Scholarship tax credit
The Governor is proposing to allow a tax credit to corporations contributing to scholarship granting organizations that provide financial aid to low- and moderate-income families to help cover the cost of tuition at K-12 private schools.

Online learning
The Governor is proposing to increase the funding for on-line learning by $3 million.

Early Childhood Screening
The Governor is recommending setting variable reimbursement rates for early childhood screening to provide an incentive to school districts to screen children at age 3. The rate would be increased to $50 per child for age 3, maintained at $40 for children ages two and four, and reduced to $30 for children age five and older.

School readiness
The Governor is proposing new program requirements focused on academic preparation for kindergarten. All districts would be required to meet the new standards to receive state aid by FY09. His proposal adds two full-time staff and one half time staff at the Department of Education at a cost of $164,000 in FY06 and $200,000 in FY07. According to the budget documents, the Governor reduces school readiness aid to fund the new staff.

Adult Basic Education
Intensive English instruction for new adult refugees: The Governor is recommending an intensive two-year English language instruction program for new adult refugees. $2 million is appropriated for this program. Reallocation of capped ABE funds: The Governor recommends reallocating the excess portion of ABE state aid that results in the cap that aid not exceeds program expenditures for the year.

Statewide testing
Science assessment: The Governor is recommending an appropriation of $1.2 million in FY06 and FY07 to develop a computer-based science assessment administered in grades 5, 8, and high school after the completion of biology.

Replace the 8th grade basic skills test with MCAII: The Governor is proposing to replace the 8th grade basic skills test with the MCAII.

Department of Education
The Governor is proposing a reduction in the MDE budget of $67 million in FY06-07.