Tuesday, September 13, 2016

Measure 2 and its potential impact on schools.

On November 8th we will vote on those that will represent us in political office and also make some decisions on the five constitutional measures found on the 2016 ballot. There is one constitutional measure in particular that may impact your local schools. Measure 2 allows additional access to the Foundation Aid Stabilization Fund for education related purposes. The fund was established in 1994 by the citizens of North Dakota and is maintained by the state’s oil extraction tax. The only time the fund can be accessed is if the Governor calls for state wide cuts to funding. It is a safety net for K-12 public education in the event of a revenue shortfall. The fund has been used two times since its inception, once in 2002 ($5 million), and most recently this year ($120 million). Currently the amount in the fund is approximately $600 million.

Key Facts:

  • The foundation aid stabilization fund is a locked asset and has only been used two times in 22 years. (2002 & 2016)
  • The measure allows for 15% of the state aid to K-12 Public Education to remain protected for the historical use of the Foundation Aid Stabilization Fund (only to be used to make state aid whole in the event of a statewide budget shortfall). 
  • The principal balance above the protected 15% may be used for education related purposes. 
  • At 2016 levels, 15% equates to $300 million. This dollar amount will be protected for the sole purpose of K-12 public education in the event of a statewide revenue shortfall. 
  • 10% of the oil extraction tax revenue will be placed into the fund annually. This year (2016) that amount is approximately $150 million. 
  • Based on data from the North Dakota Department of Public Instruction, it will take approximately $164 million more than the past biennium just to maintain the current level of funding.

2016 has been a challenging economic year within the state of North Dakota. Many state agencies received cuts due to the revenue shortfall. Thanks to the foresight of state leaders, public education was protected from cuts due mechanisms like the Foundation Aid Stabilization Fund. The 65th legislative session may be a challenging one for our state legislators. If the state is unable to continue to provide current levels of financial support, this may result in local districts providing additional support. Based on projections, it seems that maintaining 15% within the fund should meet the needs if there are future revenue shortfalls. If Measure 2 passes it will be important to further define education related purposes for the excess dollars within the fund.

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