Public education funding is complex. Many people wonder why school districts continually speak of underfunding and seem to constantly ask for money through referendums and levies.
To appreciate the complexity, one needs to understand the special education cross-subsidy and how it affects school district budgets. In short, the special education cross-subsidy measures the difference between the special education expenditures and associated revenues, including state categorical aids, federal categorical aids, third-party revenue, and state and local revenues.
What happens to the unfunded portion of special education costs? A school district’s general fund covers the shortage between the revenue the district receives in the special education expenditures each year. This happens in every Minnesota public school district. In other words, these underfunded costs come directly out of the districts’ general fund, essentially requiring school districts to pay these costs from the fund that is to be used for other more general purposes.
The underfunding of special education has been a long-standing problem — at both the state and federal level — that has been swept under the rug for years. For as long as I can remember, special education costs have never been fully funded. The federal government is required to fund 40 percent of special education costs, yet federal funding levels have never been above 18 percent.
For school districts, the unfunded and underfunded cross-subsidy for special education costs can be significant. For Rochester, the gross cross-subsidy is $16 million, adding up to $740 per pupil in cost. Stewartville has a $1.3 million gap amounting to $545 per pupil, and Byron faces an $880,000 gap, amounting to $338 per pupil. The statewide total cross-subsidy amount for school districts for fiscal year 2016 was $679 million — a 5.6 percent increase from fiscal year 2015.
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Between the rising need and insufficient state and federal aid, the amount of funding school districts, as a whole, in Minnesota will be required to pay from the general education fund for special education costs will reach an average of $815 per student in fiscal year 2017.
The number of identified students needing special education services at some level has climbed significantly in the past few years. Commensurately, the cost of those services has also risen, leaving districts to grapple with how to pay for more students, more services, more mandates — with no money to pay for all of it.
More and more districts are forced to levy for these mandated, yet essential services. The solution isn’t to find another way; the solution is to hold the state and federal government accountable.
The Minnesota School Boards Association membership has started a statewide initiative on behalf of our school districts and the 850,000 public school students. School boards are passing resolutions asking for increased federal and state funding and, at the state level, to create a work group or task force to fix special education funding, specifically with a focus on the impacts of the new special education funding formulas, the projected cross-subsidy, and a specific timeline to accomplish these goals.
More than 150 school board resolutions were hand-delivered to Minnesota’s congressional members in February, and the number of resolutions approved by school boards has now risen to more than 175.
We urge you to join us to make an impact this year by working with your local school board and ask Minnesota legislators to take decisive action in the development of a clear path to fully fund special education. All our students deserve this.
