General Education Terms

Ag2School Credit - The 2017 Minnesota Legislative Session passed Minnesota state statute 273.1387 (Ag2School Credit). This Ag2School tax credit establishes agricultural school bond credit on all existing and future school bond referendums. The Ag2School tax credit on school bonds will increase to 70 percent over the next three years. This is permanent law enacted through the tax bill by the Minnesota Legislature. Learn more here.

Bond - Written promise, generally under seal, to pay a specified sum of money (face value) at a fixed time in the future (date of maturity) and carrying interest at a fixed rate, usually payable periodically; often used by school districts to raise construction money.

Debt Service Equalization - Debt service equalization aid provides state funding to local school districts to help repay the bonds issued to finance construction. The amount of aid a school district receives is based on a complex calculation that relies in part on the amount of the district’s debt and in part on the district’s taxable property tax base. Learn more here.

ESSA - Every Student Succeeds Act - The nation’s latest pre-kindergarten through grade 12 education law, was signed into law in December 2015. ESSA is the newest version of the 50-year-old federal Elementary and Secondary Education Act and replaces the 2001 reauthorization known as No Child Left Behind. ESSA emphasizes equity and gives states and schools more latitude to innovate, while maintaining a focus on accountability and an emphasis on state and local systems of improvement (MDE, 2016).

FY - Fiscal Year - A 12-month period between settlements of financial accounts. The school district fiscal year runs from July 1 through June 30. For example, fiscal year 2020 is equivalent to the 2019-2020 school year (July 1, 2019 - June 30, 2020).

General Education Revenue - General education revenue is the primary formula for providing general operating funds to school districts and charter schools and is composed of basic general education revenue; extended time revenue; declining pupil revenue; local optional revenue; gifted and talented revenue; basic skills revenue, including EL and compensatory revenue; sparsity revenue; operating capital; equity revenue; small schools revenue; and transition revenue.

Levy - (Verb) to impose property taxes or special assessments on property. (Noun) the total of property taxes or special assessments on property imposed by a governmental unit.

Long Term Facility Maintenance (LTFM) - The state of Minnesota provides school districts with the financial authority to address ongoing maintenance problems in buildings through a combination of non-voter-approved property taxes and state aid, which is called LTFM. How does it work? State Statute reference.

MDE - Minnesota Department of Education.

Net Tax Capacity - Property taxes in Minnesota are primarily levied on a measure called net tax capacity, which is simply the taxable market value of a property multiplied by its class rate.

Open Enrollment - Enrollment Options - Various legislative-enacted programs that allow students to attend a district other than the district of residence or a post-secondary institution without paying tuition charges. More on Open Enrollment.

Referendum - A vote by the whole of an electorate on a specific question(s) put to it by the school board.

Minnesota School Finance Guide

This guidebook is a reference tool for the Minnesota school finance system, the method by which funds are provided to operate public elementary and secondary schools.