February 9, 2009: Legislative Report #15

Indexing for K12 Education

HF02 and 138 the “Minnesota Miracle” K-12 education bills have an indexing clause included. Indexing provides inflation protection to budgets similar to an annual raise someone receives from an employer to offset the effects of inflation. Education in Minnesota expects revenue protection from inflation and thus includes indexing in formulas for funding.  Below is an example of how indexing state expenditures for K-12 education can affect a budget. If we apply a 4%, inflation to the next biennium K-12 education would receive a $542,395,200.00 automatic funding increase by 2012.  

FY 2010 state spending on K-12 education $6,647,000,000.00 multiply by inflation of:

3.5%   automatic increase of $232,635,000.00    $44.74 per every man, woman and child in Minnesota

4% automatic increase of $265,880,000.00    $51.13 per every man, woman and child in Minnesota

5%  automatic increase of $332,350,000.00    $63.91 per every man, woman and child in Minnesota 

In FY 2011, $6,912,880,000.00 from FY 2010 plus 4% inflation equals $276,515,200.00 resulting in a spending level going into the next biennium of $7,189,395,200.00 for K-12 education. In addition, HF02 and138 include about $2,500,000,000.00 of spending increase over inflation. Under HF02 and 138 and only a 4% inflation rate Minnesota is committing $9,689,395,200.00 or $1,863.35 per every man, woman and child in Minnesota on K-12 education in 2012, a 45.5% increase in just 2 years.