By Vernae Hasbargen, MREA lobbyist
“I wish I could go back and un-ring the 2003 bell, because I would if I could” is how Skoe described Education Enhancement Revenue (EAR) to the K-12 Committee.
What Senator Skoe is referring to is the tax reform agreed to during the final year of the Ventura administration. Ventura wanted to expand sales taxes to services in order to lower property taxes just as Dayton proposed this year. While Ventura didn’t get the sales taxes, he did get a state takeover of education not paid for in the long term.
Skoe wants “to un-ring” the state takeover, which was followed by years of under-funding and led to an over-reliance of referenda, creating an unacceptable funding gap between students as well as school districts with less buying power today than in 2003.
How would EAR work?
EAR would allow school board to take $300 of operating levy and roll it into the formula, making it permanent revenue and not subject to frequent renewal elections. Ironically, the 2003 tax reform also had a roll-in but that $415 was different in one dramatic way – it was all state aid. EAR will be a combination of aid and local levy depending on the property wealth of your district.
Giving school board’s the authority, especially in districts where they have refused to pass a referendum, makes Skoe’s idea the target of Republican opposition because they want voters to make the final decision.
Roll-in and more equalization, but lower cap and moratorium
The second part of EAR is increased referenda equalization because the formula that determines the state and local share has not changed in 20 years when almost all districts received some aid.
Skoe doubles the factors, moving the 1st tier (first $700 per pupil) to $880,000 vs. the $476,000 currently. The 2nd tier ($700 to $1,600 cap) will be equalized at $440,000 vs. $270,000. He equalizes his $300 roll-in at a slightly higher amount – $952,000 and lowers the cap by $300. Finally, he calls for a moratorium on new levies in 2013.
Index to inflation?
Skoe wants the tax rates on a $100,000 house to be the same in Bagley as Burnsville. Now the difference is almost 4:1 between property rich and property poor districts.
While Skoe’s bill calls for equalization factors to be indexed to inflation, he will remove that provision as the bill moves forward. Senator Stumpf pointed out that without indexing, “We’ll end up in the same spot five years from now.”
Reaction to EAR
School district groups have expressed strong support for EAR, except for the suburban districts. They won’t support EAR unless they get Location Equity Index (LEI) that gives them additional revenue for their personnel costs.
Earlier the Senate heard Senator Bonhoff’s bill that created an LEI entirely of state aid, giving metro districts LEI in the same way rural districts get sparsity, but the bill was a non-starter because of its cost.
Not only were rural legislators opposed, arguing that regional centers in neighboring states drive up their salary costs, but Senator Torres-Ray of Minneapolis strongly urged policymakers not to adopt a policy that creates greater regional inequities. She cited the cost of recruiting professionals to rural Minnesota and how it creates a “misdistribution” of resources.
Mary Cecconi of Parents United was on the Governor’s Task Force that came up with the $300 roll-in idea in the first place. She testified that Skoe’s bill was their “greatest fear” because legislators took only one piece of their recommendation.
The second piece was an additional $200 referenda roll-in for rural regional centers and $400 for metro districts. Skoe said he would not pay for this LEI out of his tax target, but if the K-12 committee wanted to pay for it, he wouldn’t object. He urged them not to do it until the gap between students was closed first and argued that housing in the metro area is an asset which appreciates over time, while teachers in rural communities often end up with homes worth less money than they paid 30 years before.
Bonhoff told Skoe that she had come prepared to offer an amendment to add the higher roll-ins but that she would save it and attempt to add it later when as the bill makes it way through the legislature. The House version of this bill has already been amended.
Fixing the Picture
Skoe was repeatedly asked for district runs to show EAR’s impact, but has held back in order to have a policy discussion first. When Sam Walseth testified for MREA, he showed a map with the amount of referenda per pupil in order for the committee to see where the impact of the $300 roll-in would be the greatest.
Senator Saxhaug of Grand Rapids said when he saw the color pattern, “We’ve discovered the brown and red area are not just stubborn voters, but a compounding of issues which created it from public lands, to tax policy, to seasonal dwellings.”
This is the picture the Senate is determined to fix.