Locating Equity: Implications of a Location Equity Index for Minnesota School Finance

Equity is an important feature of state education finance formulas. This article examines one aspect of equity, the equalization of purchasing power that is associated with geographic location. We applied two methods to the 2013-2014 Minnesota school finance system to equalize the purchasing power of districts for that year. The level of imparity in purchasing power depends on the index used, where cost disparities ranged from 25 to 41 percentage point differences between the highest-cost and lowest-cost districts. These cost disparities negatively affected several metropolitan districts, serving between 52.9% and 63.9% of Minnesotas 785,899 public school students in school year 2014. To equalize purchasing power for high-cost communities, Minnesota would have to supplement state education aid to between 47 and 76 districts depending on the equalizing method used. To equalize purchasing power in the state's basic general education revenue allocation would cost the state between $171.8 million and $229.9 million. This accounts for less than 3% of funds devoted to K-12 schools in fiscal year 2014.