Caledonia Argus

Minnesota K-12 spending comparison reveals no ìBlack Holeî

Posted: 9/10/02

by Jeff Van Wychen

There has been much hand wringing in Minnesota about growth in government expenditures, especially elementary and secondary public school expenditures. While K-12 spending in Minnesota has grown in recent years, the rate of growth has been below the national average. Furthermore, while Minnesota spending per pupil is modestly above the national average, there are clear indications that Minnesota is getting a positive return that justifies its investment in K-12 education.

The Property Tax Study1 Project and the Minnesota Budget Project2 have undertaken a study that examines growth in Minnesota government over a recent ten-year period and compares that growth to the national average. The following analysis of growth in K-12 spending in Minnesota is derived from that report. The full report will be released later this summer.

The K-12 spending information used in this analysis is from the Census of Governments, which is prepared every five years by the U.S. Census Bureau. The Census of Governments is national in scope and therefore enables comparisons between Minnesota and other states. The most current Census is from 1997.

In constant 1997 dollars, elementary and secondary public school current expenditures per pupil in Minnesota grew from $5,640 in 1987 to $6,272 in 1997 - a growth of 11.2 percent over the ten-year period. This translates into an average annual rate of growth of 1.1 percent.

The 11.2 percent rate of growth in Minnesota compares to a national average growth rate of 15.7 percent. Thus, during the decade from 1987 to 1997, current K-12 spending in Minnesota grew at a rate that is modestly below the national average.

While the rate of growth in public school current expenditures per pupil in Minnesota is below the national average, it nonetheless exceeds the rate of growth in inflation and enrollment. What factors explain this growth?

Perhaps the most significant factor contributing to growth in school expenditures over the last decade is special education. In recent decades, federal and state governments have decided that a dramatic change in public policy regarding special education was necessary to address the needs of disabled students. As a result of these changes in special education policy, special education spending has increased.

In Minnesota, the rate of growth in total education expenditures in recent years has been two times the rate of growth in total K-12 spending. Furthermore, on average Minnesota public schools are spending two times more on special education students than on regular education students. Based on a 1997 report from the legislative Auditor, special education costs accounted for 21 percent of total Minnesota school district spending.

This citation of facts should not be regarded as a criticism of special education spending. Indeed, the changes in special education policy were necessary in order to ensure that all students have equal educational opportunities. The reference to this information regarding special education costs is merely intended to underscore the fact that changes in special education policy has caused substantial increases in K-12 spending.

Special education costs are growing due to reasons beyond the control of school districts. In recent years four trends have accelerated growth in the cost of special education services:

ïMany disabled children of school age who were formerly cared for in institutional settings have been deinstitutionalized and returned to public schools due to federal requirements that disabled children be placed in the least restrictive educational environment. From FY 1991 to 1997, the number of special education students enrolled in Minnesota public schools grew by 28.8 percent.

ïAdvances in medical technology have increased the number of medically fragile students who survive and can be cared for in a public school setting.

ïCourt, state, and federal mandates continue to increase the level of service expected from school districts. For example, Supreme Court decisions have confirmed that school district are responsible for all medical services for medically fragile students up to (but not including) medical services provided by a doctor.

ïAn increase in the incidence of high-cost disabilities - such as autism and deafness - and an increase in the number of students with multiple disabilities have resulted in further increases in the cost of providing special education services.

To a large extent, the provision of special education services is not a discretionary item for school districts. Under federal law, an Individualized Education Plan (IEP) must be prepared for each disabled student. Because the IEP is a legally binding document, school districts must provide the services specified in the IEP. Courts have consistently upheld the right of disabled students to receive services specified in the IEP. In short, school districts are not at liberty to refuse delivery of special education services.

Other factors that contribute to growth elementary and secondary public education costs include:

ïIncreases in the number of ìlimited English proficiencyî (LEP) students. Due largely to immigration, the number of LEP students has grown much more rapidly than total enrollment. Large increases in the number of LEP students have created additional expenses for school district.

ïIncreased health care costs. All levels of government are affected by rising cost of providing health care to employees. However, school districts are especially hard hit by health care costs because personnel expenses are an especially large percentage of school district budgets.

ïTechnology. In order to equip students for life in an information-based economy, school districts must provide students with access to computers and other forms of technology. This creates new expenses for school districts.

ïPerformance standards. In recent years, school districts have been asked to ensure that students are able to meet certain performance standards. To some extent, these new standards create new costs for school district.

While elementary and secondary school spending per student in Minnesota has grown less rapidly than in other states. Minnesota current spending per student in 1997 is still 6.6 percent above the national average based upon information from the 1997 Census of Governments.3 Does Minnesota have anything to show for this higher rate of investment in public education?

The answer to this question would seem to be ìyes.î While Minnesota ranks 15th in the nation in terms of current elementary and secondary spending per pupil, Minnesota ranks first in the nation in math proficiency, sixth in science proficiency, and fifth in reading proficiency. In addition, Minnesota ranks second in the nation in American College Testing Program (ACT) scores and third in the percentage of adults over age 25 with a high school diploma.

In short, Minnesota appears to be getting a ìbang for the buckî from its elementary and secondary public school investment. Based upon various national studies, Minnesotaís superior academic outcomes translate into a strong business climate and a ìquality of lifeî that surpasses that of other states.

In summary, an examination of expenditure trends gives no indication that K-12 education in Minnesota is a fiscal ìblack hole.î Minnesota K-12 spending per pupil has grown less rapidly than the national average. While Minnesotaís K-12 spending per pupil is still modestly above the national average, that higher level of spending corresponds with superior academic outcomes. However, it remains to be seen whether Minnesota can maintain these superior outcomes if per pupil spending continues to decline relative to the national average.

Jef Van Wychen is Consultant to the Property Tax Study Project located in the Twin Cities.

1. The Property Tax Study Project is a collaboration of eight Minnesota local governments - including the Minneapolis and Saint Paul school district - that studies issues pertaining to government finance and taxation.

2. The Minnesota Budget Project is an initiative of the Minnesota Council of nonprofits that provides independent research and analysis on state budget and tax policy issues with an emphasis on issues affecting low - and moderate - income persons.

3. Other sources indicate that elementary and secondary public school current spending in Minnesota is not quite so high above the national average. For example, the most current Digest of Education Statistics from the U.S. Department of Education indicates that elementary and secondary school current spending in Minnesota is only 2.1 percent above the national average in FY1999.

Editorís Note: This article first appeared in the August 2002 issue of the Minnesota School Boardís Association Journal. It is reprinted with the permission of the publisher.

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