House passes $15.7B education finance bill

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K-12 education finance bills that account for roughly 40 percent of the state’s general fund spending are moving through the House and Senate floors this week.

The House passed its $15.7 billion two-year omnibus budget and policy bill 83-50 on Tuesday evening. The bill increases funding for education over the base budget by $550 million. On Thursday, the Senate is scheduled to take up its own bill, which contains a $536 million spending hike.

The House and Senate both fund all-day, every-day kindergarten and early childhood education. The bill that passed the House floor spends $105 million for all-day kindergarten and $50 million for early learning scholarships. Both bills increase funding for the state’s basic education formula, but at different levels.

In presenting the education budget on the floor Tuesday, House Education Finance Chairman Paul Marquart, DFL-Dilworth, said the increased funding and an overhaul of student testing methods are aimed at improving students’ readiness for college and the workforce. He’s dubbed the goal of his bill’s funding increases and policy changes as “Minnesota’s World’s Best Workforce.”

“By 2027, when the kindergarteners who will start in the fall of 2014 graduate, we will completely close the achievement gap,” Marquart said. “We will have a 100 percent graduation rate, 100 percent literacy rate by third grade and make sure 100 percent of our students are career- and college-ready.”

Rep. Kelby Woodard, R-Belle Plaine, who is the lead Republican on the Education Finance Committee, criticized the bill for increasing the state’s education bureaucracy through measures such as expanding regional centers for excellence.

“To think we’re going to make a difference with this bill is an open question,” Woodard said.

But after seven hours of floor debate, the bill passed with the support of 10 House Republicans. They were: Reps. Jim Abeler, Paul Anderson, Bob Barrett, Tony Cornish, Greg Davids, Bob Gunther, Ron Kresha, Denny McNamara, Mark Uglem and Dean Urdahl.

A few Republicans, including Kresha and Barrett, said they voted for the bill because it provides funding equalization for school districts with lower property tax wealth than more affluent communities. Barrett said his local school district has gone to four-day weeks and has been hurt because the state equalization formula hasn’t been adjusted in a long time.

“I really want to see fairness in funding, and the bill goes a little bit toward that end,” Barrett said.

House and Senate spending differences

The House and Senate proposals differ on some significant spending choices.

The House devotes $315 million of its new spending to increasing the basic education formula. The formula increase amounts to $209 per student.

“I think the biggest difference is that where we have $315 million on the formula, they have $100 million in the Senate,” Marquart said. “A lot of their money goes to property tax relief. We think, if we’re going to get the world’s best workforce, we have to have those dollars in the classroom, making sure we can increase student achievement and close the achievement gap.”

Both the House and Senate include funding that’s aimed at assisting school districts that struggle with school funding because local voters haven’t supported local property tax levy increases. The Senate is looking to recreate a form of the statewide general education levy that had been part of school funding before it was eliminated in the 2001 property tax reform legislation, according to Senate E-12 Division Chairman Chuck Wiger, DFL-Maplewood. The Senate had a target of $150 million for funding property tax relief through education funding. Wiger said his bill provides $20 million for the statewide levy and also contains $130 million to buy down three school levies.

“The levy would be consistent throughout the state based on the ability of an area to pay. It’s equitably applied,” Wiger said.

The House bill does not contain the statewide general education levy. The property tax provision in the House bill, which won Barrett’s support, would provide 37 school districts that don’t have a property tax levy with $300 per student of equity and referendum revenue. A total of 54 other school districts that have levies below the $300 per student level would also benefit. The proposal amounts to $30 million of the House’s increase in K-12 funding for the biennium.

Another notable difference is the House’s choice to pay off the $808 million that the state still owes school districts from the school aid shifts of the past two budgeting cycles. The House tax bill proposes a temporary income tax hike on people making $500,000 in annual income to pay off the shift. The education bill assumes that in fiscal year 2014 and afterward, the normal 90/10 payment schedule for state aid to schools is in place.

The Senate, which has a lower spending target than the House, is relying on current law mechanisms to repay the shift. Under Minnesota statute, state budget surpluses projected in the twice-annual economic forecasts automatically go toward paying back the shift. Surpluses in the last two forecasts have whittled down the shift from $2.4 billion and are expected to pay it off completely over time, Wiger said.

“We think the current statute provides a responsible payback of that IOU,” he said. “I would expect the approximately $800 million outstanding will be paid off in the next two, or no later than three, forecasts.”

GRAD test eliminated

One major policy change in both the House and Senate bills involves discarding the current system in which high-school students are required to pass certain tests to graduate. Over the objections of Republicans, the House bill that passed on Tuesday eliminates the high-stakes testing program called Graduation-Required Assessment for Diploma (GRAD), which tests high school students in reading, writing and mathematics. State officials have become concerned about the failure rate of students taking the GRAD test, which was launched in 2008. Currently, they can still graduate if they fail the math test three times by demonstrating their ability through other measures. But in the 2014-2015 school year, students who fail the test won’t graduate.

The bill establishes an assessment process that starts in eighth and ninth grade and does not apply the so-called “cut” scores that hold students from graduation. It would also draw upon Regional Centers of Excellence to help students who are struggling.

“What we have in place right now, the GRAD test, a cut-off score isn’t working,” Marquart said. “We have one of the biggest achievement gaps in the nation, and 47 percent of students that go on to a MnSCU college have to take remedial classes, which have cost parents and students $5 million in remedial tuition each and every year.”

The state’s biggest business lobbying groups have fought the elimination of GRAD. Minnesota Chamber of Commerce President David Olson and Minnesota Business Partnership Executive Director Charlie Weaver last month penned an op-ed piece in the Star Tribune contending that the GRAD test has already helped improve the state’s large achievement gap between white and minority students. They claimed that it’s “so effective that there isn’t a rational explanation for why legislators and education officials in Minnesota want to scrap it.” Last week, the Coalition of Minnesota Business bought radio and TV ad time calling on lawmakers not to eliminate GRAD.

Jim Bartholomew, who lobbies on education policy for the Business Partnership, said the House proposal doesn’t include accountability for how students perform.

“Our concern is kids have to take the test, but there are no expectations for how well or how poorly they do,” Bartholomew said. “They just take it and that’s all.”

Rep. Sondra Erickson, R-Princeton, offered an amendment during Tuesday’s floor debate to essentially retain the GRAD test, which failed on a party-line vote.

Rep. Kathy Brynaert, DFL-Mankato, sought to assuage fears by saying the new system can help struggling systems develop a specific path to either a career or college.

“The assessment proposal in this legislation,” Brynaert said, “would guide those students much earlier to targeted remediation, customized interventions. It would really address issues and concerns and guide them. Are there benchmarks and standards in this legislation? You bet. But not a single cut score.”

Most of the GOP amendments offered on the House floor were defeated. One exception was an amendment by Rep. Glenn Gruenhagen, R-Glencoe, who successfully moved to create a task force that would analyze state special education laws that exceed federal requirements. The study would examine the educational benefits and costs of those requirements.

“I think it would be wise of us to find out what those additional mandates are — I’m sure they are well-intentioned — and what the cost is.” Gruenhagen said.

In March the Minnesota Legislative Auditor’s office released a report indicating that out of 45 Minnesota statutes governing special education, 19 contain at least one requirement that that exceeds federal standards. The issue of special education funding is a perennial sore spot for the Legislature, in large part because school districts face a $571 million unfunded mandate that’s attributed mostly to the federal government’s failure to pay its share of the funding.