HOW IS PUBLIC EDUCATION FUNDED IN MAINE? INTRODUCTION Of all Maine’s economic development strategies, This is not an exhaustive review of the entire public education has the greatest return on investment. education funding system. It covers major aspects Investment in education creates lifelong learners, of the system for the purpose of providing a simple opens pathways to promising careers, and grows the tool to support better policy decision-making. economy. It also produces civically engaged citizens who build vibrant communities. The policy brief series is brought to you through a partnership between Educate Maine and the Maine For the past four years, Educate Maine has published State Chamber of Commerce, and through the Education Indicators for Maine, a snapshot of Maine’s generous support of the John T. Gorman and Nellie education system presented through indicators that Mae Education Foundations. The production of the measure access, participation, and performance. report was made possible by the contributions of Lisa Plimpton (research), Frank O’Hara (writing), and Pica In addition to Education Indicators for Maine, Educate (design and layout). Maine has also published a series of policy briefs exploring specific issues related to educational achievement in depth, and making recommendations for strategic progress. This primer provides an overview of how public education is funded in Maine. Efective funding systems can promote student success, create greater equity of opportunity, and help to grow the economy. The challenge is that funding systems can also be so complicated that few people understand them. Unlike other briefs in this series, this primer contains no recommendations. Its purpose is simply explanatory. It is designed particularly for key education decision makers (school board members, state legislators, etc.) but should also be of interest to all Maine people. 482 CONGRESS ST., STE. 303 125 COMMUNITY DR. #101 PORTLAND, ME 04101 AUGUSTA, ME 04330 207-347-8638 207-623-4568 EDUCATEMAINE.ORG MAINECHAMBER.ORG 2 PRE-K TO 12: WHY IS THE STATE INVOLVED IN LOCAL SCHOOL FUNDING? “Maine has been regarded as a leader in equalizing After the referendum, Maine reconstructed its educational opportunity across its towns. While school aid program in a way that retained the general that leadership was most evident in the funding structure of giving more aid to poorer towns, but equalization formulas adopted in the 1970s, a state did so without the state collecting or disbursing commitment to ensuring educational opportunity has local property tax funds. The state instead allocated been evident since statehood.” (Dow and Townsend) revenues from income and sales tax funds to provide its share. In 2004, Maine voters passed a referendum From the very founding of the state in 1820, Maine’s directing state government to pay 55% of local Constitution has required all towns to make public school costs. education available to their youth. Very early on, in 1828, the State provided revenues to help towns with In 2005, the Legislature implemented the Essential financing this obligation. The first state school aid Programs and Services (EPS) funding model. came from revenues from public land sales, and it Prior to this law, state education funding levels had was distributed to municipalities based on a per-pupil been set based upon what the schools had spent Article VIII. Part First. Section 1. Legislature formula. In 1833, a banking tax was instituted to in the prior year. The EPS model directs the Maine shall require towns to support public schools; provide a more regular source of funds to support Department of Education to set the spending level duty of Legislature. education. In 1872, Maine created a School Mill Fund, for school aid based on independent research into which collected a one-mill property tax from all best practices that support student success. This is A general difusion of the advantages of education towns, and redistributed money back to the towns intended to ensure that state aid only goes to support being essential to the preservation of the rights on a per-pupil basis; this is the first instance of Maine what is needed for all students to meet state learning and liberties of the people; to promote this government redistributing resources across towns in standards (Maine Learning Results) and not to all important object, the Legislature are authorized, order to equalize student opportunity. budget items that local school boards might adopt. and it shall be their duty to require, the several Local districts maintain the right to spend local funds towns to make suitable provision, at their own After many refinements and changes over the years, above and beyond EPS levels and many do. expense, for the support and maintenance of in 1974 Maine passed the State Uniform Property Tax. public schools; and it shall further be their duty to In this system, the state collected a specified mill rate In 2016, voters approved a 3% surcharge on the encourage and suitably endow, from time to time, from all towns, matched the money with state funds, income tax for Maine households over $200,000; as the circumstances of the people may authorize, and distributed the funds to the schools. Some towns the Legislature and Governor repealed the tax, all academies, colleges and seminaries of learning with high property tax bases ended up paying in more but increased school funding by $162 million. within the State… than they got back. This proved to be unpopular, and And this is where we are today. the Uniform Property Tax was repealed by referendum Maine Constitution, 1820 in 1977. 482 CONGRESS ST., STE. 303 125 COMMUNITY DR. #101 PORTLAND, ME 04101 AUGUSTA, ME 04330 207-347-8638 207-623-4568 EDUCATEMAINE.ORG MAINECHAMBER.ORG 3 PRE-K TO 12: HOW MUCH IS SPENT AND WHO PAYS? Approximately $2.7 billion was spent on Pre-K to 12 Per student spending varies widely among Maine education in Maine during FY 2015 (most recent data). SOURCES OF PUBLIC ELEMENTARY & SECONDARY school districts. Though the state average is $12,939, The majority of revenue for public elementary and EDUCATION FUNDING IN MAINE, FY 2015 14 of Maine’s 240 districts spend less than $10,000 per secondary education—53%—is provided by municipal student, and 18 districts spend more than $20,000 per MUNICIPAL STATE FEDERAL property taxes. student [Maine DOE Data Warehouse]. This diference MOSTLY FROM MOSTLY MOSTLY is a reflection of local control and highly variable PROPERTY FROM SALES AND FROM INCOME AND Forty percent of total education funding - both EPS resources and capacity from district to district. and additional funds above EPS provided by local TAXES INCOME TAXES PAYROLL TAXES governments - comes from the state (not to be Maine’s 2015 per student elementary and secondary $ 1.426 billion 1.061 billion 184 million confused with the state’s obligation to pay 55% of EPS). spending ranked 16th among the 50 states [Census The state raises this revenue through state income % 53 40 7 School System Finances Survey]. and sales taxes. However, all of the other New England states spend How does this break down by student and how does more per student than Maine [Census]. Maine compare to other states? Per student spending, it should be clarified, includes all operations and debt Adjusted for inflation, per student education spending expenditures, but does not include teacher retirement. in Maine has increased by about 20% on average since 2003-04, as shown below. SOURCES OF PUBLIC ELEMENTARY & SECONDARY EDUCATION FUNDING IN MAINE, FY 2015 PER STUDENT ELEMENTARY AND SECONDARY EDUCATION SPENDING: MAINE AVERAGE Federal State 7% $12,110 $12,107 $12,198 $12,939 40% $10,678 $11,150 $11,714 2016 DOLLARS 2003-04 2005-06 2007-08 2009-10 2011-12 2013-14 2015-16 SOURCE: Maine Department of Education Data Warehouse Municipal 53% SOURCE: Public Education Finance: 2015, U.S. Census Bureau 482 CONGRESS ST., STE. 303 125 COMMUNITY DR. #101 PORTLAND, ME 04101 AUGUSTA, ME 04330 207-347-8638 207-623-4568 EDUCATEMAINE.ORG MAINECHAMBER.ORG 4 PRE-K TO 12: WHAT SHARE OF LOCAL AND STATE SPENDING IS DEDICATED TO EDUCATION? The figures in the previous section showed the levels and sources of all funding for Pre-K to 12 public EDUCATION FUNDING AS A PERCENTAGE OF EDUCATION FUNDING AS A PERCENTAGE OF schools in Maine. This page is about efort—how much ALL EXPENDITURES: STATE GENERAL FUND ALL EXPENDITURES: MAINE MUNICIPAL of the state budget, and how much of local budgets, EXPENDITURES, FY 2016 EXPENDITURES, FY 2015 are dedicated to Pre-K to 12 public schools? At the state level, public education expenditures as a Other K-12 Education Code Enforcement whole comprise 45% of the state general fund budget. 15% General Purpose 48% Aid for Local 1% Of this total amount, 9% is for higher education. Debt Service Schools Economic Development This leaves 29% for local schools, 5% for teacher 3% 29% 2% retirement, and 2% for early childhood and other Parks, Rec & Libraries 3% education programs. Personal County Assessment 5% At the local level, Pre-K to 12 education expends about Services 14% Higher education half (48%) of municipal spending in Maine. 9% Administrative Offices 5% Teacher retirement Employee Benefits 5% Medicaid/ 5% Public Works MaineCare Other education Early childhood 15% 24% programs education Municipal & School Debt Public Safety 1% 1% 5% 10% All State Education Expenditures: 45% All Municipal Education Expenditures: 48% SOURCE: State Budget Overview 2016, Maine Legislature Office of Fscal and Program Review SOURCE: 2015 Fiscal Survey Report, Maine Municipal Association 482 CONGRESS ST., STE. 303 125 COMMUNITY DR. #101 PORTLAND, ME 04101 AUGUSTA, ME 04330 207-347-8638 207-623-4568 EDUCATEMAINE.ORG MAINECHAMBER.ORG 5 PRE-K TO 12: HOW DOES THE STATE DECIDE HOW MUCH TO ALLOCATE TO EDUCATION? The state must determine two things when The second step in the process is to create a formula considering education funding.