MN closes ‘donut hole’ in school funding: Could mean $580K in new revenue for Perham-Dent

Minnesota legislators have closed a 'donut hole' in education funding, and it could mean $580,000 in new money for the Perham-Dent School District. Governor Mark Dayton signed the new funding option into law with this session's omnibus tax bill o...

Minnesota legislators have closed a ‘donut hole’ in education funding, and it could mean $580,000 in new money for the Perham-Dent School District.

Governor Mark Dayton signed the new funding option into law with this session’s omnibus tax bill on March 21.

The bill, among other things, addresses a prior oversight in education funding that allowed some schools to receive more state money than others. It extends local optional revenue to all public school districts, closing the so-called donut hole that has kept about 70 mid-sized districts, such as Perham-Dent, from being able to partake in funding options that other districts were privy to.

“It’s some of the best news we’ve gotten out of the Capitol in a long time,” said Perham-Dent Superintendent Mitch Anderson. “We were expecting to get $212, the same as the larger schools in greater Minnesota, but I think it became a thing of fairness.

“I think common sense told them it was the right thing to do,” he added, explaining that now all schools have the potential to receive the same funding as metro districts.


The unequal funding situation began in 2011, when the Minnesota legislature created ‘small schools revenue,’ which benefitted districts with fewer than 1,000 students enrolled. Perham’s enrollment was too high to qualify for this revenue.

In 2013, ‘location equity revenue’ was added to public school funding options. This revenue was for districts with 2,000 students or more. This time, Perham’s enrollment was too low to qualify.

The result was that districts like Perham-Dent, with enrollments between the cutoff points, were left to get by with less revenue than other districts.

Now, all school districts in Minnesota will have the option of collecting local optional revenue up to $424 per pupil.

“This will be a great equalizer for rural districts,” said House Education Finance Committee Chair Paul Marquart, who is also a teacher at Dilworth-Glyndon-Felton High School.

Marquart said Perham-Dent will be able to add more than $500,000 to its budget per year, beginning in 2016, if the school board decides to pursue the full amount.

Anderson said that number is actually closer to about $580,000.

Combine that with the $300-per-student levy approved by the board earlier this year, and Perham could have about $1 million in extra revenue by 2016-2017. The $300-per-student levy funds will be available starting next school year.


When asked how these funds might be put to use in the district, Anderson said that nothing has been earmarked. Instead, it would go to the general fund.

“I think the big thing is…there have been so many cuts and reductions over the last eight years…it’d be nice to bring some of those programs and options back,” he said.

The school board will need to vote on how much of the $580,000, if any, to accept. The board could choose to utilize all, some or none of the available funding.

Local optional revenue is distributed across residential, commercial, and limited farmstead (a house, garage and one acre of land) property taxes. As with the board-approved levy, seasonal properties and most agricultural land will not be included.



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