Minnesota Budget Project - The Lost Decade

The Lost Decade

The state government is a partner with the nonprofit sector, the business community and Minnesota’s residents in building a state with a high quality of life in which all people have the opportunity to succeed. Minnesotans have been served well by public investments. We are a leader in covering the uninsured and graduating our students from high school. Our state economy outperformed the national average for decades.

However, the decisions made to close budget deficits in this decade raise questions about whether the state has maintained its commitment to public investments. So the Minnesota Budget Project decided to take a deeper look at state investments over the past ten years in four key areas important to the well-being of Minnesotans and their ability to succeed. These areas are:

E-12 education
Higher education
Child care assistance
Affordable housing and homelessness prevention

The resulting report, The Lost Decade: Taking a Closer Look at Minnesota’s Public Investments in the 2000s, finds that the choices to cut spending in past deficit years have taken their toll.

Since Fiscal Year 2003, state funding has declined in the four key areas of investment (after adjusting for inflation).

And Minnesota has lost ground compared to other states.

In each area, the report outlines the policy choices that influence funding in that area and how those choices impact Minnesotans.

Below are the key findings for each area.

E-12 Education:

Minnesota is now average in its education spending compared to other states. In FY 1987, per pupil education spending in Minnesota was 11 percent above the national average. By FY 2006, Minnesota’s per pupil spending was equal to the national average.

School districts now rely more on property taxes. A decline in state aid to schools since FY 2003 has resulted in a modest reduction in total school revenue and a significant increase in school property taxes.

State general fund spending on E-12 education rose by 10 percent from FY 2000 to FY 2009. A major tax reform meant that in FY 2003, about $1 billion in school funding was taken off of local property taxes and replaced by state funding. However, state E-12 funding has gradually declined since FY 2003.

Higher Education:

In-state tuition increased by 68 percent at the University of Minnesota from 2000 to 2007. Average tuition in the Minnesota State Colleges and Universities system (MnSCU) rose by 55 percent over the same period. At the same time, the average state grant amount actually decreased by 7 percent.

Minnesota’s ranking among states in state funding for higher education dropped from 12th in FY 2001 to 35th in FY 2006, as a share of personal income. And although Minnesota is below-average in state funding for higher education, it is above-average in the cost of attending public institutions.

State general fund spending on higher education dropped 16 percent from FY 2000 to FY 2009. Significant cuts earlier in the decade were partially restored in recent years.

State higher education funding per full-time student dropped by 28 percent from FY 2000 to FY 2007.

Child Care Assistance:

Minnesota severely weakened its child care assistance programs as a viable support for working families as a result of severe cuts made in the 2003 and 2005 Legislative Sessions. Policymakers tightened eligibility requirements, increased out-of-pocket costs for parents and froze reimbursement rates for child care providers.

11,000 fewer children accessed child care assistance in October 2005 than in June 2003, after deep cuts were made to child care

State general fund spending for child care assistance dropped by 26 percent from FY 2000 to FY 2009. Increased federal funding made up for some of the lost dollars, but total federal and state child care spending in Minnesota in FY 2009 is still 16 percent below FY 2000 levels.

The state cut funding for child care assistance by a cumulative total of $250 million from FY 2004 to FY 2007.

Affordable Housing and Homelessness Prevention:

The number of households in Minnesota spending more than half of their income on housing more than doubled from 1 in 15 households in 2000 to 1 in 8 households in 2006. Minnesota had the fastest growth in the nation in this measure.

State funding for affordable housing and homelessness prevention gradually declined in the 2000s, with the exception of two one-time boosts in funding. From FY 2001 to FY 2009, funding fell by 17 percent.

Minnesota Loses Ground Compared to Other States

During the 2000s, Minnesota also lost ground compared to other states when it comes to higher education and E-12 spending. Minnesota’s ranking among states in state funding for higher education dropped from 12th in Fiscal Year 2001 to 35th in Fiscal Year 2006, as a share of personal income. And although Minnesota is below average in state funding for higher education, it is above average in the cost of attending public institutions.

Minnesota is now average in its education spending compared to other states. In Fiscal Year 1987, per pupil education spending in Minnesota was 11 percent above the national average. By Fiscal Year 2006, Minnesota’s per pupil spending was equal to the national average.

To get the report:

Download a PDF of The Lost Decade.
Download a PDF of the executive summary of The Lost Decade.
Read the press release announcing the report.
To request printed copies, contact Nan Madden by email.

2314 University Ave W. #20
St. Paul, MN 55114
Phone: 651.642.1904
Greater Minnesota: 1.800.289.1904
Fax: 651.642.1517
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