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 three major categories:
State Education Finance Appropriations
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.
The 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., career and technical aid, adult basic education aid).
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.