MINNESOTA'S SCHOOL AID TAX REFORM : A COMPROMISE
HARRY WELTY
STATE AND LOCAL GOVERNMENT
(read my comments at the end)
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One of the more contentious
Proposals in the 1971-72 Minnesota Legislature's omnibus tax bill was the reform of public school financing.
The problem of inequitable school financing as it exists in Minnesota and other states lies in the use of
locally levied property taxes.
The school financing formula used before the new tax package was adopted worked like this. Each school district was required to levy a minimum of 60 mills to finance its schools. If the 60 mill levy in a district with a low tax, base did not
a insure that $404 per pupil unit 1
was raised the state would supplement the districts revenue.
This particular formula allowed great variation between different school districts. School districts with low tax bases can not compete financially with districts with high tax bases. As a result of this disparity court contests are being waged by low tax base communities to test the constitutional validity of the present Minnesota tax formula.
An example of the disparity which occures is cited in one of the cases pending action in the Minnesota U.S. District Court under judge Miles Lord.
In Sioux Valley, Minnesota, 4814 was spent on each student in the 1969-70 school year while in Deer Creek, Minnesota,
$499
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was spent on each student. But Deer Creek's property taxes
were 313.9 mills, ( $31.39 per $100 of assessed valuation ), which were almost three times as high as
the 114.1 millage in Sioux Valley. 2
If the legislature was successful in assembling the present
school tax proposal it may have circumvented such court action.
Governor Anderson gave impetus to the reform during his gubernatotial
spelling campaign. Anderson added to his list of
priorities the eradication of inequity in school financing. The proposal gained support from inner city legislators as well as liberals in general.
Another major factor in the adoption of a reformed school aid plan was the ruling of the California State Supreme Court. The Court held that the wide disparities in the California public school financing system were in violation of the equal protection clause of the 14th Amendment. That decision said among other things : "
We have determined that this funding scheme invidiously discriminates against the poor because it makes the quality of a child's education a function of the wealth of his parents and neighbors. Recognizing as we must that the right to an education is a fundamental interest which can not be conditioned on wealth, we can discern no compelling state purpose necessitating the present method of financing."
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The gravity of the California decision and the hint by Judge Lord that
he is in agreement with the California decision was not dismissed lightly by legislative leaders resistant to greatly increased state aid to local school districts. Both Senate Majority Leader Stanley Holmquist and House Education Committee chairman Harvey Sathre, introduced legislation shortly after the California decision which would have alleviated
<--poor choice of words to
some degree the questions raised by the California Court.
Another reason for the acceptance of the school aid reform while mundane is none-the-less instructive. The measure was tied to the omnibus tax package and any undue tampering with the measure might have doomed the entire package to a further delay. This would have frustrated the legislators who had already suffered through Minnesota's longest special session and who had jobs to return to.
The process by which the final proposal emerged was one of compromise. It would be difficult to detail all the influences which played havoc with the
reform. However, the account which follows will describe the development of the proposal and outline the major compromises which shaped the final school aid formula.
As was indicated earlier the idea of greater state assumption of school financing first gained credibility as a plank in governor hopeful
<-- poorly exp. tho I know what
you meant .Anderson's platform. The Governor's initial
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proposal was aimed at total state assumption of school finances.
This had necessarily to be modified when it became evident that conservative
opposition to such a plan would be insurmountable.
The compromise which was accepted raised the total
the of state aid to schools from the $624 million level of the 1969-71
biennium to the level of $1.042 million for the 1971-73 biennium. This by any standard is a substantial increase.
The consequences of these actions can best be illustrated by showing the increase in dollars per pupil unit from the
last biennium to the next. The state required $404 per pupil unit in the 1969-71 biennium in 1972 that will be
increased. to $600 and in 1973 that will be boosted to $750.
The disparity, mentioned earlier, between school school districts districts will not be eliminated by the new legislative formula,
however, the state has established a more equitable distribution pattern with a greater emphasis on state financing and the increase of the
per pupil unit
standard.
Furthermore, the state has given more responsibility
for financing to the school districts. The new tax bill increases the 60
mill minimum levy applied to the per pupil unit to a 90 mill minimum. Unclear
This 30 mill increase was
adamantly opposed by rural conservatives. They expressed concern that farmers
owning large
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tracts of valuable farm acreage would be severely taxed by the increased mill levy.
In the past the problem had been dealt with by enacting a law which deducted 25 mills from local
taxes
applied to farmlands. To offset the 30 mill increase against farmlands in the current tax formula a
$22-million aid
program for rural areas was established. This rural aid program was added to supplement school districts
restricted from taxing farmlands at non farmland tax rates.
Early in the formulation of the bill the core cities had been singled out to be benificiaries of a special supplemental school aid program of one sort or another. The core city legislators complained of the poor tax base in their constituency and demanded additional financial assistance for their schools. The core city was aided by a provision in the new tax bill which sets aside $37 million for special payments to school districts with children from homes receiving AFDC.
The dispute over methods of taxation was a distinctly partisan issue with liberals advocating an income tax financing plan while conservatives generally advocated a raise in the state sales tax from 3 percent to 5 percent. In this case the income tax was the more progressive revenue producing source.
The solution again was a compromise with an increase in
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income tax and a raise in the state sales tax to 4 percent rather than
5 percent with the income tax providing the greater share.
The acceptance of the school aid formula by the legislature was not easily accomplished.
The legislature will long afterwords be remembered for its indecision and petty feuding during the special
session. It is worthy to note., however, several factors which shed a more favorable light on the outcome of the session. First, the formula was accepted with
strong bipartisan support. Second, the school financing is based primarily progressive income tax. Finally, the school financing formula is a landmark in state educational financing. Minnesota goes a long way to
meet the principles annunciated in the California Supreme Court decision
although that decision is no way binding
on Minnesota.
While Minnesota's new tax law falls
short in assuming the total state school finances it will make significant
progress in ending the outlandish inequities which have plagued low tax base
areas in the past.
FOOTNOTES
1 Pupil unit - Pupil units are
used to determine the amount of aid that a school district should receive. A kindergartner is counted as half a pupil
unit; a student in grades 1-6 as, a single pupil unit and a student in grades 7-12 as 1.4 pupil units.
2 Parsons, James, " Judge hints state must
equalize taxation," Minneapolis Tribune, October 31, 1971 sec., p.l.
BIBLIOGRAPHY
Donovan, Joseph L., The Minnesota Legislative Manual
1969-1970
St. Paul : State of Minnesota, 1969.
Maxwell, James A., Financing State and Local Governments, 2nd ed.
Washington D.C. : Brookings Institution,
1969
Wise, Arthur E.," The California Doctrine," Saturday Review,
November 20,
1971
" Movement at the Capitol ?," Minneapolis Tribune, September
27,
1971 sec. A, p.1
Lewis, Finlay, '" School-aid accord reported near," Minneapolis
Tribune,
October 9, 1971, sec. B, p.1.
Lewis, Finlay, " Legislature to reconvene today," Minneapolis
Tribune, October 12, 1971, sec. A,
p.l.
Lewis, Finlay, " State school aid accord reached," Minneapolis
Tribune, October 13, 1971,
sec. A, p.l.
Parsons, James," Judge hints state must equalize school
taxation,"
Minneapolis Tribune, October 13, 1971, sec. A,
p.l.
Lewis, Finlay, " Legislative leaders approve state tax bill,"
Minneapolis Tribune, October 15, 1971, sec. A, p.l.
Lewis, Finlay, " Tax bill passes both chambers, goes to
governor,"
Minneapolis
Tribune, October 28, 1971, sec. A, p.l.
In addition to the articles mentioned another 33 articles from
both the Minneapolis Tribune and the mankato Free press were utilized to
supplement those listed in the bibliography.
Well done
A-
I found the font (mistral)
which closely approximates Prof.
Pockrass's handwriting. You can see a sample of the original in the white square
to the left. I put his comments in where he jotted them down on my paper.
At first he gave the paper a B+ but then changed his mind, crossed the grade
out, and upgraded it.
Young people today have no
idea what a pain it was to use a typewriter back in the old days, especially if
they could barely type. I taught myself how to type 15 years after graduating
from college. Thank goodness for spell checkers today. Looking through this
paper after all these years its obvious that I could have used one in college.
Even when I turned this in I
was a little uncomfortable about having exclusively listed newspaper stories in
my bibliography rather than books. The issue of public education finance reform
was taking place in the legislature even as I wrote the paper and most of the
information I found about it was in periodicals.
The next year Governor
Anderson appeared on the cover of Time Magazine wearing a flannel shirt and
holding up a big fish. Wendy made the cover because they were doing a story
about how well Minnesota was being governed.
This was the last non-partisan
legislative session. No legislative candidates had been listed on the ballot as
Republicans or Democrats since a 1920's reform. "Conservative" and
"Liberal " were the ballot designations used at election time. After
1971 many former "conservatives" became Democrats and some
"liberals" became Republicans. Go figure! I can't say running
under partisan labels has been a great improvement although back in 1971 its
advocates felt the reform of the reform was like "truth in
advertising" legislation.
I didn't put that much
thought into most of my other college papers. Evidently I had some sense
that this one was special. Its the only one I ever kept. Its a good historical
text.
