In short, referendums are an integral component of Minnesota’s education funding system. While the education bill approved in the 2023 legislative session provided a significant overall funding increase and made important progress toward reducing the massive funding shortfalls in the special education and English learner programs, education funding remains primarily a state and local partnership in Minnesota with a modest share of funding from the federal government. The importance of the local component of that partnership is illustrated in the graph below. Two key local levies, voter approved referendum revenue (approximately 9 percent) and local optional revenue (more than 6 percent), provide more than 15 percent of general education revenue. The most important funding stream, provided by the State, is the basic education formula which accounts for approximately 70 percent of general education revenue.
While overall state education spending has exceeded inflation since 2003, the basic formula has lagged far behind the rate of inflation. In fact, the basic formula would be $1,356 per pupil higher today if it has kept pace with inflation since 2003. School districts are left to turn to the operating referendum to make up the difference. The historic inflation rates experienced over the past few years have had a major impact on school district budgets. While inflation has moderated in recent months, it was running at 9 percent a year ago. At the same time, school districts have faced unprecedented staffing shortages and had to respond by significantly increasing salaries in several job categories to fill vacancies.
Capital projects and bond referendums are critical to meet other financial needs. Capital projects referendums provide school districts with revenue to address needs related to classroom technology, cybersecurity assessments, building security, including cameras, door lock systems, visitor management systems, and emergency response structures. The State does not provide a dedicated funding stream for technology which is so critical to ensuring students have the opportunities they need to reach their full potential and graduate from high school prepared for post-secondary or career.
Major building projects are funded at the local level. The State provides funding for deferred maintenance and equipment purchases but new construction, additions to existing buildings, and major renovations are generally financed by the sale of bonds following the approval of a bond referendum by the voters. Voters are encouraged to contact their local school officials if they have questions about their school district’s referendum.
Read more in the October edition of the AMSD newsletter.