School Finance 101

  • This page is intended to break school finance down to its simplest descriptions.  This page does not answer all of your questions, but is intended to give you the basics.  We encourage you to read this information and if you have questions feel free to call us.

    Elementary and secondary education in Minnesota is financed through a combination of state-collected taxes (primarily income and sales taxes) and locally collected property taxes.  Revenue for school districts is received in these major categories:

    • General Education Aid: The largest share of the education finance appropriation, general education aid, is intended to provide the basic financial support for the education program.

    • Categorical Aids: Categorical revenue formulas are generally used to meet costs that vary significantly between school districts (i.e., special education) or promote certain types of programs (i.e. intergration, adult basic education).

    • State Paid Property Tax Credits: Property tax credits reduce the amount of property taxes paid.  To make up for this reduction, the state pays the difference between what was levied in property taxes and what is actually received in property taxes to school districts and other taxing districts.

    • Property Tax Levies: Property tax levies are usually determined as part of a formula that includes state aid. The largest share of the levy is from voter-approved levies—the excess operating referendum and debt service levies.

    Funding normally comes from the federal government, state government and via local voter-approved initiatives. Our  primary source of funding comes from the State of Minnesota.  The legislature decides the state's E-12 basic funding levels, as well as directing what services schools must provide.  In determining how much funding we receive, the legislature uses a complex formulate that considers the number of students, special needs within our district, property wealth and several other factors.  For our school district the state currently funds 80.3 percent of our budget.

    Our School Board, after receiving administrative support, determines how our monies are allocated.  General education funds pay for operating expenses, including salaries, benefits and supplies. Funds are also distributed to schools and sites.  When there is not enough funding within the budget, the School Board may ask voters to approve an operating referendum levy.

    We recommend that to help understand the complexities of PreK-12 funding in our state, please take time to read the following Minnesota Department of Education documents:


    For specific information and/or requests, please email Joseph Primus at joseph.primus@isd728.org