Funding elementary and secondary education in Minnesota

Funding for schools

Education provides broad public benefits and should be made available to all eligible citizens of a country, regardless of their degree of affluence. Under such a system, it is necessary for education to be financed by the government, given its capability of collecting resources from the private sector and distributing them equitably among institutions in the public sector.  Government through taxation produce most educational services consumed in the United States. Taxation is a system of transferring money from the private sector to the public sector of the economy. Federal education funding is distributed to states and school districts though a variety of formula and competitive grant programs. The public institutions of the nation are almost completely dependent on this method of obtaining funds for their operation.

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Brimley, Verstegen, and Garfiled (2016) have reported that a good tax system should include the following features: (1) All citizens should pay some tax. (2) Taxes should be fair. (3) Taxpayers should be left in the same relative financial position to one another after taxes are paid, and taxes should not influence behavior. (4) The tax should bring a reasonable yield, not be merely a nuisance tax. (5) Tax revenue should be predictable and not vary widely from year to year. (6) The tax should be levied on the person or household who pays it; the shifting of the tax should be minimized.

The financing of elementary and secondary education in Minnesota comes through a combination of state-collected taxes (primarily income and sales) and locally collected property taxes. Revenue to school districts is received in three major categories, the three categories are 1. State Education Finance Appropriations (funded with state-collected taxes)

A. General Education Aid – The largest share of the education finance appropriation, general education aid, is intended to provide the basic financial support for the education program.

B. Categorical Aids – Categorical revenue formulas are generally used to meet costs that vary significantly between districts (i.e., special education) or promote certain types of programs (i.e., literacy incentive aid, adult basic education aid).  2. State Paid Property Tax Credits (funded with state-collected taxes) Property tax credits reduce the amount of property taxes paid. To make up for this reduction, the state pays the difference between what was levied in property taxes and what is actually received in property taxes to school districts and other taxing districts. 3. Property Tax Levies are made with voter approval, or at the discretion of individual school boards, usually up to limits or for expenditures in categories authorized in a law by the Legislature. The largest share of the property tax levies made by school districts is from voter-approved levies: the excess operating referendum and debt service levies.

State funding for elementary and secondary education is generally distributed by formula. Many states use funding formulas that provide funding based on the number of pupils in a district. Some formulas are weighted based on different factors such as the number of students with disabilities, the number of students living in poverty, or the number of students for whom English is a second language. The allocation for students with different types of needs can vary significantly depending on the funding formula. Additionally, in some states, the formula is designed so that higher poverty school districts with less access to local funding receive additional assistance. Property taxes support most of the funding that local government provides for education. Local governments collect taxes from residential and commercial properties as a direct revenue source for the local school district. Wealthier, property-rich localities have the ability to collect more in property taxes. Having more resources to draw from enables the district to keep tax rates low while still providing adequate funding to their local school districts. Poorer communities with less of a property tax base may have higher tax rates, but still raise less funding to support the local school district. This can often mean that children that live in low-income communities with the highest needs go to schools with the least resources, the least qualified teachers, and substandard school facilities.

 Schools in the private sector operate under a different set of theories and rules than those in the public sector. Some believe that private schools are more responsive to consumer demand because the private educational organization that fails to meet demand see a reduction in pupils, which lead to a reduction in resources available to hire staff, acquire buildings and property, and creates endowments. The ability of private schools to meet consumer demand largely determines how much financial support is available for their future operations. The desires, needs, and even whims of potential purchasers are soon met in the private sector because ignoring them would translate into a loss of revenue and profits. Profits are earned when revenues, generated by sales, exceed costs. Profits are meaningful only in the private sector of the economy. When consumers and producers engage in market transactions, the resulting profits are signals that private firm use to guide their investment, hiring, and strategic decisions. Though the resources generated in the private sector, the public sector, including education, receives the financial resources it requires to operate.

In conclusion, taxation is fairer and more dependable for financing education than the previously used rate bills, tuition charges, and student fees. At the same time, private individuals, companies, and churches sponsor many schools. In certain other countries, education is largely producing a private sector. Private foundations may be a source of revenue for some school districts. However, the collaborative effort of the private and public sectors working for education may have a greater impact than the actual funds raised through foundations.