Tuesday, April 30, 2013

Senate Passes Tax Bill on Second Try.  Monday's Senate debate on the omnibus tax bill made it seem like the entire proceeding was going to be anti-climactic.  I anticipated a session that would be fraught with amendments trying to highlight the proposed tax increases in the bill along with some of the other provisions.  Instead, the proceedings leading up to the first vote on final passage (note the word "first") was relatively quiet and straightforward.  As I wrote earlier, I was expecting a series of amendments on the income tax, cigarette tax, and the sales tax portions of the bill, but there was very little discussion of that outside of the Republican's macro-theme that given the state of the Minnesota (and national economies) and the fact that the projected budget shortfall has shrunk dramatically, tax increases of the size proposed by the DFL majority simply aren't needed and will be detrimental to the average Minnesotan and, by extension, Minnesota as a whole.

Nine amendments were offered, two being fairly technical amendments coming from Senator Rod Skoe, the Senate Tax Committee chair and the bill's chief author.  Three of these amendments were successful; the two offered by Senator Skoe and one by Senator Karin Housley that exempted districts that have passed a resolution to put an operating levy question on the ballot from the referendum freeze contained in the bill (more on that later).  The six amendments that failed came from a variety of sources and were offered by both caucuses.

There was also a motion to re-refer the bill to the Senate Finance Committee that failed.  The reason that motion was in order is that the tax bill contains a $200 million appropriation for proposed renovation of the Capitol area.  There is reluctance on the part of the Senate to pass a bonding bill, but a realization that the Capitol needs refurbishing and upgrades in a number of areas and the desire to contribute to that project and get it underway.  Bonding projects are almost exclusively handled in the Capital Investments Committee, hence, the discomfort on the part of some for allowing the bill to go forward without a review by the Finance Committee.

But the relatively brief debate (it was a couple of hours, but when one is expecting eight hours, two hours seemed like a welcome nanosecond) belied the drama that was to come.  When it came to the final vote, the bill failed on a vote of 32-34 (35 votes needed for passage).  7 DFLers (6 of them freshman senators) voted against the bill and one Republican voted for the bill.  One DFL senator was absent.  The Senate then recessed and both parties headed into private caucuses.

After something like this happens, it's off to the woodshed to put things in order and after a bit, the Senate re-convened, a DFL Senator who had voted against the bill moved to re-consider the vote.  That motion was successful and the debate ensued once again.  A motion was made to refer the bill back to the Tax Committee and that motion failed, setting up another vote for final passage.  This time, the bill passed on a vote of 35-31, with two DFLers changing their votes from "no" to "yes" and the senator absent from the first vote joining on the affirmative side.

As I mentioned briefly above, Senator Karin Housley offered an amendment that would exempt districts who have already passed a board resolution to proceed and put a question on the ballot this fall.  The bill contains a referendum freeze and this isn't the first time a legislative body has included a proposed referendum freeze (or levy cap) to accompany an increase in property tax relief (and the property tax relief in the Senate bill is considerable).  There is always a concern that property taxpayers will not see the effects of the property tax relief if local governmental units simply turn around and "levy back" the relief.  Of course, the difference between school districts and other units of local government is that school districts have to seek voter approval for almost all proposed levy increases while cities and counties can increase levies by council/board approval.  The problem--and Senator Skoe admitted this in his support of the Housley amendment--is that school districts often plan years in advance as to when they will go before the voters and how much they will seek when they do.  A number of districts have been in the planning process to go before the voters with a ballot question this fall and the proposed freeze would throw a king-sized monkey wrench into those plans.  While Senator Housley's amendment only exempts districts whose boards have already passed a resolution to put the question on the ballot, I believe the sentiment will be to allow more districts to seek voter-approved levies this fall once all the dust settles.  Whether that comes in the form of no freeze or a modified freeze remains to be seen, but I urge any district thinking of going out this fall to put their efforts on the rails and make certain that their legislators know of their district's intention.

Just an aside before I move to the next subject.  As I wrote earlier, I expected a raft of amendments yesterday accompanied by a protracted debate.  The debate was long enough, but amendments did not appear in the multitude I imagined.  It got me to thinking how much social media has changed the process.  It used to be that the public's knowledge of the tax bill and its effects were, if not limited, certainly not at the level they are given the resources available to the average citizen.  People who frequent blogs, go on websites of interest, or follow Twitter have a much greater appreciation for the contents of the bill that previous generations of legislative followers.  This gives opponents of a bill an expanded platform from which they can make their case against the bill either in real time or in a manageable window to get maximum play in the public.  In brief, it's probably a lot more effective way to transmit to interested parties their angle on what is happening in respect to a given bill.  Still, I expected a few more "gotcha" type amendments to insert into negative campaign ads (that's the paradigm in which I was raised), but I think the way the debate and subsequent reaction went down is an indication of how things have changed.

Here are links to news stories on the Senate tax bill deliberations.

MNPost:  http://www.minnpost.com/politics-policy/2013/04/minnesota-senate-needs-two-tries-pass-dfl-tax-bill

StarTribune:  http://www.startribune.com/politics/statelocal/205331721.html

Pioneer Press:  http://www.twincities.com/ci_23131157/minnesota-senate-vote-clothing-income-tax-increases

MPR:  http://minnesota.publicradio.org/display/web/2013/04/30/politics/senate-dems-turn-around-tax-bill-vote-after-initial-defeat

Education Conferees Set.  The conference committee members in the House and Senate have been named.  The House conferees are:

  • Representative Paul Marquart (DFL-Dilworth), House Education Finance Chair
  • Representative Carlos Mariani (DFL-St. Paul), House Education Policy Chair
  • Representative Kathy Brynaert (DFL-Mankato)
  • Representative Will Morgan (DFL-Burnsville)
  • Representative Dean Urdahl (R-Grove City)

The Senate conferees are:

  • Senator Chuck Wiger (DFL-Maplewood), Senate E-12 Division Chair
  • Senator Patricia Torres Ray (DFL-Minneapolis), Senate Education Chair
  • Senator LeRoy Stumpf (DFL-Plummer)
  • Senator Alice Johnson (DFL-Spring Lake Park)
  • Senator Kevin Dahle (DFL-Northfield)

A few observations.  First, because no Republican voted for the omnibus education funding bill in the Senate, there is no Republican on the conference committee in the Senate.  A number of Republicans voted for the omnibus education bill in the House and Representative Urdahl has several provisions that he authored that are in the bill.

Representative Brynaert and Senator Dahle have done a lot of work on the assessment issue in their respective legislative bodies and they will be the key players on meshing the two bills together on that issue.  The framework of proposed changes in the assessment system is the working group report from the Minnesota Department of Education that was released near the end of 2012, but there are differences that will have to be ironed out.

Senator Stumpf's presence on the conference committee (he is no stranger to education conference committees, having served as the Senate E-12 chair for eight years) is likely because of the Senate's position on the re-establishment of the general education levy.  One of the things to watch as the education and tax conference committees begin is which target will carry the proposed education property tax relief.

Thursday, April 25, 2013

Senate Passes Omnibus Education Funding Bill.  It took about nine hours, with 33 amendments offered and debated (7 adopted), and a kerfuffle during the roll call vote, but the Senate passed the omnibus education funding bill on a vote of 35-28.  No Republican legislators voted for the bill and 3 DFLers voted against it.

The main objections to the bill come from those who believe the GRAD test (or some test with a "cut score")   needs to be retained instead of being replaced with the work of the assessment working group convened by the Minnesota Department of Education last summer.  If the Republicans in both the House and Senate have settled on an issue to attack the DFL approach to education this session, it appears that it will be the proposed changes in the student assessment system.

The other issue that was targeted by the Republicans was the proposed re-establishment of the general education levy.  Several amendments were aimed at either protecting businesses from the re-implementation of the general education levy.  Another angle taken by the Republicans in the criticism of this portion of the bill revolved around the question of why this subject is being handled in the omnibus education funding bill and not in the tax bill.  Of course, as I reported yesterday, there is significant education funding in the tax bill and the cross-pollination of tax policy and education funding policy between the two bills is puzzling (at least at this stage of the debate).

Another set of amendments was aimed at the decision to delay the implementation of the teacher evaluation process passed in 2011 by one year into next biennium, when funding for the program will also be made available under this bill.  Senator Branden Petersen, chief author of the teacher evaluation bill while serving in the House of Representatives last biennium, offered an amendment that would keep implementation on the schedule adopted in 2011.  He also offered an amendment that would have eliminated the practice of "last in/first out."   As in the case of the teacher evaluation process, Petersen was the chief author of that measure.  If you recall, that was passed by the Legislature but vetoed by the Governor.  These measures, like nearly every Republican amendment, went to the legislative graveyard today.

The kerfuffle I mentioned earlier in this piece came as the final vote was being taken.  Senator Chuck Wiger, the chief author of this year's omnibus education funding bill, gave an impassioned speech both urging support and answering Republican criticism as the debate was winding down.  It is generally the tradition that the speech of the chief author is the final speech given.  Because Senator Wiger's speech hit on several points raised by particular Republican legislators, those individual legislators wanted to respond to Senator Wiger's comments.  Instead of recognizing those Senators (which may have been simply an oversight), the presiding officer called for the vote to commence.  Because debate cannot continue during a vote, the legislators who wanted to speak took umbrage with the presiding officer.  For awhile, it appeared that the entire Republican caucus would boycott the vote, but because the Senate was "under call," all Senators present must vote unless they are excused from voting.  The vote took a bit longer to execute, but after a brief delay, all Republicans who were present voted (and all voted against the bill).  Just an interesting way to finish nearly nine hours of debate and discussion.

The bill will now be sent back to the House--it is important to remember that from this point forward the omnibus education funding bill will be HF 630--where the House will move to not concur with the amendments placed on the bill by the Senate (which is in effect the Senate substituting its version of the bill for the House version).  That will result in the naming of conferees in both the House and Senate with that decision being announced tomorrow.  The respective staffs in the House and Senate will likely spend their weekend putting together analysis of each bill and side-by-side documents comparing the two bills with the conference committee beginning to meet formally next week.  It is almost the first of May (I couldn't believe it when I looked at the calendar), which leaves us just three weeks before the Legislature must adjourn.

There are a lot of differences in the overarching approaches taken by the House and Senate, but there really isn't a lot of difference in the major initiatives undertaken in each bill.  Both bills have voluntary all-day kindergarten, have stressed the basic formula over the special education formula, and contain the changes to the assessment process.  The big difference is in the overall budget target and the fact that the Senate has put so much property tax relief in their education funding bill.  In other words, once the overall budget targets are set, there probably isn't that much to fight about and the negotiations should be relatively smooth.  There is a rumor that the Governor is going to push hard for money to go into his proposed special education changes and that could complicate things, but that is merely a rumor at this point.

The Senate is taking up the omnibus education policy bill tomorrow.  Unlike the House, the Senate is passing its funding and policy bills separately.  How that works when conference committee commences will be interesting.

Wednesday, April 24, 2013

Omnibus Bill passes House.  After an extended floor debate which saw multiple amendments offered (with very few--and none for which a roll call was requested--adopted), the House passed the omnibus education funding bill by a vote of 80-53.  8 Republicans joined the entire DFL caucus in supporting the bill.  Most of the debate centered on the work of the assessment working group that met last summer to develop a new assessment system for Minnesota's high school students.  There has been a concerted effort over the past few weeks by opponents of the report (especially the elimination of the GRAD) to heighten concern among the public regarding the proposed changes and it showed in the buttons with the slogan "Don't Dumb Down the Diploma" worn by a number of legislators and the number of amendments related to the proposed assessment changes.  It's obvious that the DFL members took caucus positions on the amendments, keeping the more contested amendments off the bill.  Some majority members "walked" on a few amendments, but there was sufficient opposition to keep the bill "clean" (at least in the eyes of the majority).

Here is a link to the roll call votes on the amendments and the bill:  http://www.house.leg.state.mn.us/votes/votesbynumber.asp?billnum=HF0630&ls_year=88&session_number=0&year=2013

Tax Committee Takes Testimony, Amends Tax Bill, and Sends it to the Floor.  SF 552, the Senate version of the omnibus tax bill, was discussed in the Senate Tax Committee today.  Milaca Superintendent Jerry Hansen testified in favor of the Education Advancement Revenue program that is part of the bill.  As described yesterday, the Education Advancement Revenue will bring districts with less than $300/PU in referendum revenue up to that amount and will swap revenue from the newly-created component with referendum revenue in districts with more than $300/PU.  In other words, new revenue for districts with less than $300/PU in referendum revenue and tax relief for districts for a vast majority of districts with referendum revenue in excess of $300/PU.

In another matter, the tax bill was amended to include the integration levy that was not included in the Governor's budget (but was subsequently made a part of the House omnibus education funding bill).  The Senate omnibus education funding bill did not include the integration levy in its work.

Senate Education Funding Bill Expected UP Tomorrow.  Speaking of the Senate omnibus education funding bill, it is expected to be debated and approved tomorrow on the Senate floor.  The Senate is covering a number of bills this week and protracted debate on any of them could slow things down and prevent a timely approval of the bills.  It is my guess that debate on the Senate bill will center on two sets of provisions:  (1) the Senate's re-establishment of the general education levy, and (2) the assessment section that is similar to that of the House.

Tuesday, April 23, 2013

Senate Tax Committee Adds Education Funding Provisions.  When the Senate Tax Committee unveiled the Senate Omnibus Tax Bill--SF 552--this morning, it contained several education funding and education tax relief measures.  Senator Rod Skoe, the Senate Tax Chair, was the chief author of SFs 177 and 526  As a brief refresher, SF 177 was the bill introduced in January that doubled the referendum and debt service equalizing factors.  SF 526 was the bill that created a new funding category called Educational Advancement Revenue (EAR) that would roll in $300/PU of referendum revenue into this new category and provide districts with less than $300/PU in referendum revenue the difference between their current referendum revenue per pupil and $300/PU.  EAR would be equalized discretionary levy.

SF 552 contains much of SF 526, making EAR part of the omnibus tax bill.  The equalization factor for EAR would be $785,000/PU in referendum market value.  It's important to remember that the Senate changes the pupil weightings considerably in its bill, so it is difficult to compare this proposed equalizing factor with current law.  In terms of a "back of the envelope" calculation, it looks like an increase of 45% in the equalizing factor.

The EAR mechanism also reduces the referendum cap by $300/PU and sets a new referendum cap at 25% of the general education formula amount.  I have been unable to discern whether or not the districts currently "grandfathered" above the cap would remain above the cap.

There were no increases in the equalizing factor outside of the increased equalizing factor for EAR.  This is very disappointing to me--and I suspect a lot of SEE members--who were hoping that SF 177 would have been the centerpiece of the Senate's heralded education property tax relief proposal they have been promoting all session instead of the decision to re-establish the general education levy that is currently in SF 453, the omnibus education funding bill.  There is what I would call "backdoor" increased equalization in SF 552, as EAR is equalized at a higher rate than the first tier referendum is.  Further, the first tier remains at about its current law level, meaning that the sum of EAR and the first tier adds approximately $300/PU in heavily-equalized revenue.  The total price tag on EAR and the equalization is $83.6 million, so it is a heady amount.

All that said, higher referendum equalizing factors are still preferred to the general education levy, as the re-establishment of the general education levy does not address the property tax "yield" disadvantage experienced by low property wealth school districts.  While low property wealth school districts may get more relief in the aggregate compared to high property wealth school districts in the process that re-establishes the general education levy, this relief evaporates faster than it does in high wealth districts if and when the low property wealth district attempts to turn the relief into new referendum revenue in a subsequent election.  Policy makers who operate at the junction of education funding and property tax policy often forget that equalization is both property tax relief based on the relative wealth of the school district and "yield enhancement" also based on the relative property wealth of the district.

So, disappointments aside, SEE marshals on.  It is difficult to say how the education property tax proposals proceed.  The House Education Funding bill has an increase in the equalizing factor which provides approximately $30 million in relief and indexes the equalizing factor into the future.  The House omnibus tax bill contains no education property tax provisions.  As I've just outlined, both the Senate omnibus education funding and tax bills contain education property tax relief proposals.  All these provisions will likely find their home in either the tax bills or the education funding bills and be negotiated as part of those packages.

I will keep you posted.

There are one other interesting education property tax proposals in the Senate omnibus tax bill.  Under the bill, there would be a referendum freeze this fall.  In other words, no school district could seek to increase their referendum this fall.  Districts would be able renew existing levies, but would be limited to that amount.  Obviously, this would put a number of districts at a disadvantage, as a number are seeking to increase their levies.  There may be ways around this for these districts, but no alternative paths have been suggested at this point.  My reason for pointing this out is that I remember a similar proposal within the last twenty years when districts seeking to increase their levies during a similar freeze had to apply to the Minnesota Department of Education and could receive a waiver if they met certain criteria.  While any freeze could prove detrimental (and clearly erodes any notion of local control), at the very least those districts who can demonstrate a crucial need to seek increased referendum revenue should be afforded that opportunity.

Thursday, April 18, 2013

House Education Bill Clears Next Step.  The House omnibus education funding bill passed the House Ways and Means Committee on a voice vote today after a little more than an hour of discussion and the adoption of two amendments.  Representative Tom Anzelc (DFL-Balsam Township) offered an amendment that stripped the ability for school districts to start school before Labor Day and it was adopted on a voice vote.  While not earth-shattering (nor unexpected) development, the adoption of the amendment shows once again the seeming inconsistency when a segment of the economy is pitted against the education interests of the state.  Representative Tim Mahoney (DFL-St. Paul) told an interesting anecdote.  Representative Mahoney is hosting a foreign-exchange student this school year and when the student first arrived, he was worried over how hard it would be for him to catch up with his American high school peers given the date on which he'd arrived in the United States.  In actuality, the student had arrived the first week of September and while students in his home country had been in school for three weeks, he hadn't missed a day of school in Minnesota.  Representative Mahoney's point is that we are competing in a global marketplace and yet we seem to cling to some quaint notions about the status of education in the United States (and Minnesota) and sometimes do not take the reality and nature of that competition seriously.  Folks can't complain about student achievement on the one hand and then tie school districts' hands when it comes to establishing their annual school calendars on the other.  Again, the world won't come to an end if school districts cannot start their formal school years until after Labor Day, but it's just another inconsistency that arises in the education debate.

The other amendment that was attached to the bill concerned the school climate center that is part of the anti-bullying bill.  The anti-bullying bill is also moving on its own (in fact, the Ways and Means Committee recommended the bill for passage and, like the omnibus education funding bill, referred it to the House floor at the same meeting).

The omnibus education funding bill now heads to the House floor, where it will likely be taken up early next week.

The Senate Tax Committee will be hearing the Senate omnibus education funding bill tomorrow morning.

Let's Get Philosophical.  As I was driving to the Capitol today for the House Ways and Means Committee meeting, I listened to MPR's The Daily Circuit, which featured Minnesota Education Commissioner Brenda Cassellius and Anoka-Hennepin teachers' union leader Julie Blaha (also a member of the Governor's Education Finance Working Group).  The discussion centered on testing and how the proposed changes to Minnesota's testing regimen will go a long ways toward delivering more meaningful assessment of student achievement that will be more helpful than the current system for students, parents, and educators.

Here is a link to the discussion:  http://minnesota.publicradio.org/display/web/2013/04/18/daily-circuit-standardized-testing

Wednesday, April 17, 2013

Interesting Proposal in the House Bill.  I'm sure we will all hear more about this as the education funding bills march toward final passage and make their way into the conference committee, but one of the more ambitious proposals in either bill is found in Article 2, Section 15, of HF 630.  The proposal is entitled Minnesota's World's Best Workforce and it incorporates the Centers of Excellence proposed in the Governor's budget into a framework of goals, incentives, and penalties that would govern a wide range of education achievement activities in Minnesota.  There's a lot of "mays" and a few "musts" in the language of the proposal.

The goals of the proposal are straightforward.  They are:

  1. Closing the achievement gap between all racial, ethnic, and economic subgroups,
  2. Achievement of a 100% graduation rate,
  3. Achievement of 100% of grade-level literacy at the third-grade level, and
  4. Having 100% of students college and career ready by graduation.

Healthy set of goals, no doubt, and here is a description of the proposed process to reach those goals.  Under the proposal, all school districts "must formally develop, implement, and periodically review and, where appropriate, revise a comprehensive, long-term strategic education and budget plan for student achievement premised on research-based strategies . . ."  Whew!  That is the primary must in the proposal and a mighty big and comprehensive must it is.

Things lighten up a bit when it comes to the "how" in the language.  The "must" turns into "may" and districts have options on which methods to employ in pursuit of the achievement goals outlined in the proposal, with the caveat that district plans "must include at least formative assessment practices, consistent with Chapter 120B (the academic standards chapter that will likely be revised if the math GRAD is eliminated and replaced with the proposed college and career ready standards), and other instructional best practices that inform cost-effective, research-based interventions, improve student achievement, reduce disparities in students' academic performance, and foster students' career and college readiness without need for postsecondary remediation."  The measurement of the student outcomes is fairly prescriptive and the status of the district's efforts must be reported to the public on at least an annual basis.

It's here where things get a little dicey under the proposal, as failure to reach achievement goals could result in a reduction of revenue (a maximum of 4% reduction per fiscal year) or, in the worst case scenario, result in a school turnaround plan being forced onto the buildings at which students are consistently failing to reach achievement goal.  The responsibility for handing out these punishments (hard to call them anything else) would be the Commissioner of Education along with the Regional Center of Excellence in which the affected school district is located.

This is a pretty sizable mandate (if meeting academic standards can actually be labelled a mandate; it's more like a reasonable expectation) with a lot of planning and reporting to accompany the outlined goals.  No question this is an ambitious proposal that marks, if not a sea change in the learning and assessment world, a considerable departure from the current system.  I don't imagine this proposal will mollify all who decry the elimination of the math GRAD (I just saw a television commercial urging folks to call their legislators and tell them to not repeal it), but it may produce a system that is more applicable to the challenges being faced by students and the entities that serve them.  The proposed penalties are troubling and determining who will be penalized is also a bit on the murky side, but there may be an opportunity here to do some good things and it will be interesting to see how this proposal is received by the Senate and the Governor as the conference committee commences next week.
Recap from Yesterday.  The House and Senate omnibus education funding bills passed their respective hurdles yesterday, although (as reported yesterday morning) the Senate bill took a more serpentine path to approval in the Senate Finance Committee.

After the Senate Finance Committee passed an amendment on a 10-9 vote to delay implementation of the teacher evaluation process by one year, things kind of fell apart and the debate disintegrated considerably.  There were several attempts to re-refer the bill back to the Education Policy Committee, but those efforts were not successful.  Then, there was some concern expressed about the lack of fiscal notes for several provisions in the bill.  Fiscal notes are prepared for individual bills as they move through the legislative process, but when those individual measures are incorporated into the omnibus bills, the fiscal tracking sheet that shows the proposed appropriation level for each program within the bill has traditionally served as the fiscal note.  That explanation wasn't enough for some members, which extended the debate to an extent the committee had to recess so legislators could go to floor session.

After the floor session concluded, the Finance Committee re-convened.  There was an attempt to reconsider the amendment to delay implementation of the teacher evaluation process.  That attempt failed on a tie vote and after that, there was brief debate and the bill passed on a voice vote.  It will now be up in the Tax Committee later this week (Friday likely).

The House Tax Committee approved the House omnibus education funding bill with very little debate.  At these hearings, the debate is usually limited to portions of the bill that is under the jurisdiction of the committee considering the bill.  In other words, the Tax Committee was only looking at the tax policy contained in the bill.  This took all of about five minutes.  It kind of went like this:  (1) Integration Levy re-established?  Check.  (2) Referendum Equalizing Factor increased to ensure bill doesn't create property tax increase?  Check.  (3)  Anything else?  Nope. Then I guess we'll recommend the bill to pass and send it to the Ways and Means Committee.  And that was that.

The House bill's next stop will be the House Ways and Means Committee with the hearing scheduled for Thursday, April 18, at 10 AM.

Tuesday, April 16, 2013

Education Bills Moving Today.  The omnibus education bills in both the House and Senate are at their appropriate stops this morning.  I am sitting in the Senate Finance Committee watching them consider SF 453.  The House Tax Committee will be hearing HF 630 momentarily and in the absence of immediate legalization of cloning, I'll have to run between committees..  There likely won't be a lot of action at either of these venues as these committees tend to review the bills for their macro-effects and not particular policy initiatives.  While that isn't always the case, I haven't heard any rumblings that consideration of any changes are afoot.  I'll be back later with some other observations.

EDIT 1:  Shows you how much I know.  The Senate Finance Committee is embroiled in a discussion over whether or not to delay implementation of the teacher evaluation process passed in 2011 by one year, from the 2014-2015 school year to the 2015-2016 school year.  I'm trying to calculate the reason for the proposed delay, but most likely it's because as the Senate bill currently stands does not include a line-item appropriation for the teacher evaluation process as in the Governor's bill.  Not wanting to foist an unfunded mandate on school districts (at least this unfunded mandate), it is my guess that the Senate wants to delay the teacher evaluation process until money is available.  Teacher evaluation will obviously cost money (estimates vary but go as high as almost $200 million per year) and districts not participating in the alternative compensation will especially be under duress as they try to implement this process.  Opponents to the delay are stressing that the delay is a policy issue and that the Senate Finance Committee should be involved only in the level of appropriations in the bill.  That has basically been the tradition over the years (especially in the recent past) but at the same time, there are fiscal implications as to whether or not the teacher evaluation process should proceed without a corresponding appropriation for that purpose.

EDIT 2:  The amendment to delay the teacher evaluation process by one year passed on a 10-9 vote.

And now we are back to discussion to the bill as a whole.

Friday, April 12, 2013

House and Senate Education Committees Finish Their Work.  It was a busy Thursday for both the House and Senate education finance-related committees as they finished up their work on their respective versions of the 2013 omnibus education funding bill.  The House actually had to come back this morning after adjourning last evening shortly after 10 PM to finish its work.  The Senate finished around 9 PM Thursday evening after being in committee session for about six hours.

I posted the high points of the House bill in Tuesday's post and I will do the same for the Senate (SF 453) here.  It's a bit difficult to totally "decode" the Senate bill because there are more moving parts due to their acceptance of the recommendations of the Governor's Education Finance Reform Working Group and their counting of the continuation of integration revenue as new money.  The bill also re-establishes the general education levy by combining three levy categories (safe schools, operating capital, and equity) and reducing the resulting sum by $150 million in property tax relief.  This is the $150 million in property tax relief that I thought would find its way into the bill in the form of referendum and debt equalization and I think everyone in every room of the Capitol and State Office Building knows that.  But, 'twas not the case (at least at this point in the discussion).  More on that later.

Here are the major initiatives in the Senate bill:

  • Governor's recommendation of $52 increase in basic formula amount for next year with no increase in the second year of the biennium.  Formula amounts are $5,276 for 2013-2014 and $5,687 for 2014-2015.  Second year amount is adjusted upward due to changes in pupil weightings.
  • New pupil weights beginning in 2014-2015.  1.0 for kindergarten students in all-day program, 0.55 for kindergarten students in half-day program, 1.0 for students in grades 1-6, and 1.2 for students in grades 7-12.  The 1-6 and 7-12 weights are the same as in recommendation of the Education Finance Working Group.  Marginal cost pupil units are eliminated and new declining enrollment aid established to buffer districts experiencing declines in student counts.
  • Funding for all-day kindergarten beginning in the 2014-2015 school year.
  • Change in equity formula with factors eliminated and replaced by a sliding scale based on a district's amount of referendum revenue and the distance of that amount to $2,000 per pupil.  Benefit delivered on a sliding scale with maximum benefit of $100 per pupil.
  • Creation of basic supplemental revenue category (not new money) of $56 per pupil that is combined in tandem with the new equity formula to mimic the previous equity formula.
  • Expanded transition revenue for hold harmless purposes.
  • $22/PU of revenue for non-alternative compensation districts for teacher evaluation beginning in the 2015-2016 school year.
  • Special education appropriations at current law (including growth factors) for the coming biennium.

If you read through the bill, there are a couple of numbers (and sentence constructions) that pop out.  The numbers are $411/PU and $826/PU.  Here is the reason for those numbers.  In 2001, as part of the Ventura administration's Big Plan, $415/PU was rolled into the general education formula basic amount from the referendum.  The constituted a misleading increase in the general education amount and $415/PU was subtracted from the basic amount when it was used as a multiplier for the compensatory, sparsity, and transportation sparsity programs.  With the change in pupil weightings, another revenue neutral increase in the basic formula is produced, requiring a subtraction of $411/PU to have an apples-to-apples formula value for the multiplier.  In this bill, the subtraction from the basic amount is $826/PU ($415/PU + $411/PU) for the compensatory program and simply $411/PU for the sparsity and transportation sparsity programs.

I would be remiss if I didn't express my disappointment that the committee did not pursue Senator Skoe's SF 177, which called for healthy increases in the referendum and debt service equalization programs, instead of re-establishing the general education levy.  Both these initiatives propose to deliver $150 million in education-related property tax relief and it's not like low property wealth districts won't get a lion's share of the benefit under either proposal.  The problem is that the general education levy approach does nothing to address the disparity in revenue between high property wealth and low property wealth school districts.  It can be argued that low property wealth school districts can use the "space" they get from the property tax relief to attempt to pass additional referendum levy authority, but so will a number of high property wealth districts.  Further, even if a low property wealth district can pass a referendum with the eroding value of the equalization program, the effort in low property wealth districts goes half as far as it does in high property wealth districts.  In other words, the property tax benefit of the general education levy to low property wealth districts will evaporate twice as fast as it will in high property wealth districts.

What often gets lost in the conversation is that equalization is both property tax relief and "tax power" enhancement.  Bringing back the general education levy without doing anything about the equalization factors won't do anything to remedy the property tax wealth disparities that exist between school districts and result in considerable differences in referendum revenue and educational opportunity.

I'm sure this will be discussed again as the session continues.

The education funding bills will likely reach the floors of their respective legislative houses by next week.  Both bills will make their next committee stop next Tuesday (Finance Committee in the Senate, Tax Committee in the House) and I wouldn't be surprised if they made their final committee stops (Taxes in the Senate, Ways and Means in the House) by the end of next week.  I will keep you posted.

Tuesday, April 09, 2013

House Releases Omnibus Education Funding Bill.  It's only on-line at this point for all of us junkies to gawk at, but the House has made public its omnibus education funding bill for the 2013 legislative session.  The links for the bill and data runs can be found on this page:

Link:  http://www.house.leg.state.mn.us/comm/committee.asp?comm=88006

To access the documents, go to the far right-hand column and scroll down to meeting notice for Wednesday, April 10.  Below, you will find the links to the bill, the appropriation and levy sheets, and the district-by-district data run.

There are  few surprises in the bill and some noted departures from the Governor's bill.  First, the basic formula takes center stage in both years of the biennium, with a proposed increase of $104/PU next year and an increase of $105/PU the year after.  This translates to roughly a 2% increase in the basic formula amount in each of the next two years.  This proposal goes well beyond what the Governor proposed (2% in the first year and an additional 0% in the second) and while the House target is more than $200 million more than the Governor/s, the House bill had to forego or delay a number of the Governor's recommendations.

The bill also raises the kindergarten weighting to 1.0 for kindergarten students in an all-day kindergarten program.  The weighting does not reach the 1.115 weighting for students in grades 1 through 3, but it is considerably larger than the 0.7 weighting proposed by the Governor.

The bill also increases the equalizing factor for the referendum levy, setting it at 122% of statewide average referendum market value.  Under current law, this would be approximately $573,000/PU, an increase of about $76,000 per pupil in the equalizing factor.  This value would change at both the local and state level due to the increase in the pupil weighting for kindergarten students in the House bill.  It will make every district and the state look a little "poorer" in terms of property wealth (the same aggregate property wealth divided by a larger denominator will result in a smaller value).  The proposed value after the pupil weighting change would be around $520,000/PU, but remember, the statewide average will be dropping as well so the aid-to-levy ratio will increase, making it a good move for low property wealth districts.

Districts with referendum revenue per pupil of less than $300/PU will be brought up to that amount through changes proposed for the state's equity program.  A similar provision was part of the recommendations of the Governor's Education Finance Working Group, but was not included in the Governor's budget.

Another way the House was able to fund its ambitious set of proposals was to delay (and somewhat reduce)  the implementation of the Governor's increase in special education.  The House adopts the framework of the Governor's proposed formula (a base formula, people weightings for three sets composed of different disability categories, and an excess cost formula).  This proposed increase will have to be included in the planning estimates for the next biennium if it is adopted in its current form.  The Governor's proposal cost $122 million (actually closer to $150 million by some calculations) and it will be interesting to see the price tag on the revised proposal.

Other highlights (or deviations from the Governor's budget) include:

  • Elimination of 11th grade math GRAD test and replacement with requirements developed by last summer's task force.
  • No revenue stream for teacher evaluation.  Teacher evaluation costs become an eligible expenditure within the 2% staff development set-aside.
  • Re-establishment of the integration levy (now the Achievement and Integration Revenue Program) eliminated by the legislature in 2011.
  • No significant changes to the equity revenue program other than the formula component for districts with less than $300/PU in referendum revenue.
  • No change in the debt service equalization program equalizing factors.
  • School can start before Labor Day but cannot be in session the Thursday and Friday immediately preceding Labor Day.
  • Districts can use compensatory revenue for pre-kindergarten programs.
  • $56 million in early childhood scholarships.

There are obviously a number of other provisions and I urge you to contact me with any questions you might have after reading the bill or hearing things through the grapevine.

The committee will be going through the bill tomorrow with Thursday (and Friday, if necessary) dedicated to amending the bill.  It is the committee's intention to have the bill out of committee and on its way to the  Tax Committee by the end of the week.  I urge you to check the House web page for live video if you are interested in watching the proceedings live.

It appears the Senate will be releasing its version of the bill on Thursday.

Monday, April 08, 2013

The Eagle Lands Tomorrow.  At least one of the two eagles lands tomorrow, as the House will be releasing its version of the omnibus education funding bill on-line sometime late tomorrow afternoon.  About the only inkling of what the bill will contain is that it has been announced that some improvement to the kindergarten weighting will be included in the bill and that there will be money for early childhood scholarships.

The Senate may also release its version of the bill tomorrow, although it appears there has been a bit of a slowdown as they put their bill together.  One of the rumored points of contention in the Senate is the method that will be used to deliver the $150 million in property tax relief that is part of the Senate's education funding target.  Several different approaches are being discussed, most notably SF 177 (Skoe), which delivers the relief through increases in the equalization factors for the referendum and debt service levies (along with a $300/PU discretionary levy for districts with less than $300/PU in referendum revenue and a corresponding reduction in the referendum cap) and SF 1142 (Stumpf) that would re-establish the general education levy that was eliminated in 2001 as part of the Ventura Administration's "Big Plan" and deliver the property tax relief through that vehicle.

We wait with bated breath and I will pass along the links and documents when they are posted.  Stay tuned.

Wednesday, April 03, 2013

General Education Levy Heard.  SF 1142 (Stumpf) was heard this morning in the Senate E-12 Funding Division.  This bill is a modified version of the consolidated levy proposal that Senator Stumpf has crafted at several junctures during the past decade.  Under that framework, the operating capital, equity revenue, and transition revenue programs are rolled into a new general education revenue program that will be funded with aid and levy.  What is different about this bill is that after it was amended today, is that it proposes to use the Senate's $150 million target to buy down education levies and uses that to reduce levies for all districts in the state of Minnesota.  In a somewhat related provision in the bill, the alternative compensation program (QComp) is rolled out of the general education program and funded by aid and levy outside that program.

Two points in all of this:  (1) the bill only provides new revenue for a handful of districts.  It does not provide any new money to all districts through an increase in the general education formula, and (2) it does not target the property tax relief toward low property wealth school districts.  While low property wealth districts are treated a bit more advantageously than a district with higher than average property wealth, the referendum levy remains at its current level of equalization, which creates problems for school districts.  I testified in favor of the bill's concepts, but pointed out that the legislation does nothing to narrow the gap between high and low revenue districts and because it does not put significant new revenue into the system, reliance on the referendum levy will not be lessened.  Because there will still be revenue issues, districts will continue to seek additional revenue through voter-approved levies and that system remains both random and inequitable.  So, in short, it would be nice to bring back the general education levy, but if all one does is bring it back without improving the aid/levy situation in low property wealth school districts and/or narrow the revenue gap between high and low revenue districts, the question must be asked, "What are you getting for $150 million?"

This reminds me of the points we made with the Ventura Administration in 2001 when the general education levy was eliminated.  The general education levy was the fairest levy and SEE's point in that discussion was leave the "best" levy alone and improve the levies that were becoming increasingly inequitable.  Doing the exact opposite, as suggested in the latest version of SF 1142, still doesn't address the issue of inequity that exists in the referendum and debt service levies.  Not bad policy, but policy that ignores the biggest problem facing low property wealth school districts.

Money Proposed for Teacher Evaluation.  The Senate E-12 Division also heard SF 1477 (Clausen), a bill that would provide revenue for districts to fund the teacher evaluation process that will be taking the effect in the 2014-2015 school year.  The bill differs from the $20 million the Governor proposed for this effort in a couple of respects.  First, it appears that districts that receive money under the current alternative compensation program (QComp) that would be ineligible to receive money under the Governor's proposal would be eligible under SF 1477.  Further, the money would be distributed on a per teacher as opposed to a per student basis.  There is no specific amount appropriated in the bill, but it's great to see this being in the discussion for this session.  The teacher evaluation is a huge mandate and any revenue injected into the system to help alleviate the burden that this mandate--and worthy as it may be--will inflict on districts throughout the state.

Tuesday, April 02, 2013

Back to Biz.  The Legislature returned to work this morning after its Easter/Passover break and things picked up where they left off.  The policy committee deadline has passed and its pretty much going to be all about the budget from this point forward at the committee level. A number of measures of interest (gay marriage, gun control, anti-bullying, etc.) made their policy committee deadlines and are now on the floors (or in an appropriations committee) of their respective houses.

For education, the focus now turns to the E-12 Division in the Senate and the Education Finance Committee in the House.  Both of those panels met today.  The House Education Finance Committee spent its time discussing the House version of the omnibus education policy bill that cleared the House Education Policy Committee right before the holiday break.  The biggest topic of conversation today was the proposed elimination of the 11th grade MATH grad test and its replacement with a new set of measurements to determine eligibility for graduation.  The sections of the bill relating to this subject were largely developed by a task force convened by the Minnesota Department of Education last summer.  The report of the task force can be found at this page on the MDE website: http://education.state.mn.us/MDE/Welcome/AdvBCT/AssessAccountWorkGroup/index.html

The House committee adopted a couple of technical amendments, but these provisions will be discussed once again next week when the policy bill will be melded with the portions of the bill relating to education finance.

The Senate spent its meeting time discussing proposed changes to the integration revenue program.  The program looks similar to what was proposed in the Governor's education finance working group, with the focus of the program being refocused toward achievement as opposed to the movement of students.  Further, revenue (all aid as the levy portion of the program has been eliminated with Pay 13 being the last year the levy will be collected unless it is re-established this session) will be based on students of color and not all students in the district.  There are few differences between the House and Senate versions of the bill and what was proposed by the Governor, so this is one area where agreement should be relatively easy to reach.