The Mill Levy Deduct
Hey, neither do I. But stifle any yawns just for the moment, because "mill levy deduct" promise to be three of the more important words in North Dakota's upcoming legislative session. And because the bills that result will rewrite statewide school-financing formulas, they'll influence life in North Dakota for many years to come.
The mill levy deduct -- call it the deduct for short -- is the method North Dakota currently uses to shift some wealth from "property rich" districts to "property poor" districts. It's important because the Commission on Education Improvement wants to eliminate it, and that proposal likely will be a source of great debate during the session.
In fact, the success or failure of the commission's plan could depend on it.
Currently, North Dakota figures out a "state entitlement" for each district based on factors such as the district's size. Then, it "deducts" or subtracts an amount that depends on the district's taxable value, which is a measure of its property wealth. The amount that's left over after the subtraction is the payment that the district gets from the state -- its "state aid."
So, property rich districts get a big deduct taken out of their state entitlement, and a smaller proportion of state aid than their student population alone would entitle them to. Likewise, property-poor districts get a bigger share of the state aid.
The commission wants to eliminate the deduct. Instead, it would establish a beefed-up "equity payment plan" that simply would direct extra money to property-poor districts (in addition to their state aid), but without cutting into or deducting from the state aid that property-rich districts get.
As a source of money to do those two things, it would use the additional $60 million promised by the governor.
Why is this likely to be controversial? Because Grand Forks and Minot both are "property average," it turns out. And being neither property-rich nor property poor, they'd get little new money out of the $60 million in new spending, according to the commission's plan.
Here's the bottom line. Should state aid be means tested? In other words, should "rich districts" and "poor districts" alike get state aid, with poor districts then getting an equity-payment bump? Or, should the aid be more graduated or "progressive," with rich districts -- which, presumably, are better able to pay for their own schools -- getting comparatively little from the state while poor (and average) districts get significantly more?
Like I said, it promises to be a great debate.
My initial take on the politics is that Grand Forks and Minot have an uphill struggle ahead of them if they want North Dakota to keep the mill-levy deduct. By directing substantial gains to both property-rich districts and property-poor districts, the education commission pleased a majority of districts in the state; Grand Forks, Minot and the other districts in the middle will have a very tough time fighting that majority.
To succeed, I think the "middling districts" will have to show the property-poor districts how much more they'd have to gain under a more progressive school finance plan. In other words, the commission's plan pits property-rich and property-poor districts against property-average districts; Grand Forks and Minot probably hope the alliance can shift to property-average and property-poor vs. property-rich.
As background, here is a link to a report Mike Jacobs referred to in a recent column. It's a long but very useful explanation of North Dakota's school-finance system, called, appropriately enough, "Understanding School Finance." It was written by, among others, faculty members at UND's College of Education and Human Development, and does a very good job of taking the reader step-by-step through our complicated system of paying for public schools.