The Case for Adequate Cost-Based Education Funding in Minnesota

Post 3 of 8 • Minnesota Education Finance Reform

This is the third post in an eight-part series on reforming Minnesota's K–12 education finance system, based on the Research Appendix drafted for the 2025 MDE Task Force on Education Finance. Post 1 introduced the series; Post 2 surveyed twenty years of unheeded warnings. This post makes the case for adequate, cost-based funding.

Minnesota's Unfinished Business: The Case for Adequate, Cost-Based Funding

We know education costs more for some students than others. Why won't Minnesota calculate how much more?

By Gerald Von Korff • jvonkorff.com

In 2004, Minnesota's Governor-appointed task force took an important step: it authorized a nationally recognized consulting firm to conduct a comprehensive study of how much money Minnesota districts actually need to provide every student with the opportunity to achieve state standards. The study was nearly complete when the Governor terminated the work. The adequacy study was never finished. The recommendations were never implemented.

In the two decades since, Minnesota has remained one of the only states in the country that launched — and then abandoned — such a study. Other states, including Kansas, Kentucky, New York, New Jersey, Washington, Illinois, Maryland, Wyoming, and many others, have not only completed adequacy studies but built their entire school finance systems around their findings. Minnesota has not. Ironically, Minnesota's funding is, in many respects fairer than many other states. It may well be that it would take less money in Minnesota to reach adequate funding for the students Minnesota now leaves behind. But that's not an argument for ignoring what it actually costs to meet the constitutional standard: enough funding to afford each student with an adequate education that meets all state standards. On the contrary, it means that if Minnesota would allocate enough funding, and pair that with effective practices and accountability, it should be easier to reform our broken school finance system.

This post explains what an adequacy study is, what it would likely reveal about Minnesota's funding levels, and why rebuilding the state's basic funding formula on a true cost basis is the essential first step in closing the achievement gap.

What Is a Funding Adequacy Study?

An adequacy study asks a simple but powerful question: how much does it actually cost to provide each student with a genuine opportunity to achieve state academic standards?

This is different from asking how much money Minnesota is currently spending, or what neighboring states spend, or what the Legislature is willing to appropriate. Those questions describe what is happening. An adequacy study asks what should be happening — and calculates the price.

There are two major methodologies used in adequacy studies. The first, called the Evidence-Based Funding approach, assembles educators and experts to identify the specific programs, staffing levels, and services that research shows are effective, then calculates the cost of providing them in each district. This approach has been used in Illinois, Wyoming, Arkansas, and many other states.

The second, developed by scholars over decades including Dr. Bruce Baker of the University of Miami, is an econometric cost model that uses statistical analysis of actual student outcomes — graduation rates, test scores, long-term earnings — to estimate what funding levels are associated with achieving defined outcome targets. This approach, used in a landmark 2021 national study, has the advantage of being grounded in real-world results rather than theoretical program designs.

Both approaches reach similar conclusions about Minnesota: the state is significantly underfunding the districts and students who need the most resources.

What the 2004 Taxpayers Association Study Found

Even the business-funded 2004 Taxpayers Association study — which used conservative assumptions and was explicitly skeptical of large funding increases — found that the cost of an adequate education in Minnesota varied from roughly $6,200 to over $14,000 per student depending on student characteristics. That is a more than two-to-one ratio.

The same study found that Minneapolis was underfunded by an estimated $138 million — more than $3,000 per student — even by its conservative standards. And that was in 2002 dollars. The authors acknowledged that their study was only intended to "illustrate the approach" and explicitly stated it could not be used as the basis for actual policy without further work. And that is exactly what this post advocates: that Minnesota must marshall all the evidence, develop evidence based cost estimates, and provide adequate funding with accountability guardrails to assure that districts are using adequate funding to deliver an adequate education to the students we are now leaving behind.

In other words, even the most fiscally conservative adequacy analysis available confirmed that Minnesota's highest-need districts were dramatically underfunded. And that study is now more than twenty years old.

What the 2021 Rutgers Study Found

The most rigorous recent national analysis, conducted by Dr. Baker's team at Rutgers and published by the Shanker Foundation in 2021, estimated the additional funding each Minnesota district would need to bring students to national average outcomes — a standard less demanding than full proficiency for all students.

The findings were striking. The least adequately funded districts in Minnesota included not only Minneapolis and St. Paul, but also Greater Minnesota districts like Worthington, St. Cloud, Chisholm, and Mabel-Canton, as well as suburban districts like Columbia Heights and Brooklyn Center. The pattern was unmistakable: districts serving higher concentrations of students of color, English Learners, students experiencing poverty, and students experiencing homelessness were systematically the most inadequately funded.

"Minnesota students who are English Learners, students of color — particularly Black students — and students experiencing poverty are significantly more likely to be enrolled in school districts where funding is below adequate."
— Summary of the 2021 Rutgers/Shanker National Study as applied to Minnesota

Why the Basic Formula Doesn't Work

Minnesota's basic education funding formula provides a uniform per-pupil amount to every district, with some categorical supplements for specific populations. The problem is that the basic formula was never set at a level derived from a rigorous analysis of what education actually costs. It was set — and has been incrementally adjusted — based on what the Legislature was willing to spend, not on what students need.

The 2004 Governor's Task Force put the principle clearly: education funding must "cover the full-dollar costs of ensuring Minnesota public school students have an opportunity to achieve state-specified academic standards." That standard has never been met.

Moreover, simply increasing the basic formula uniformly cannot remedy the specific deficits affecting special education, English Learner education, and education for students from low-income families. The 2004 Task Force recognized this explicitly: a uniform increase helps every district equally, but it does not address the disproportionate needs of districts serving the most disadvantaged students.

The core problem in plain terms: Minnesota currently sets its education funding based on what it is willing to spend, not on what it actually costs to deliver proficiency-level education to all students. Until those two numbers are aligned, the achievement gap cannot close — because the state is systematically under-resourced in the districts serving students who need the most support.

What a Genuine Adequacy Study Would Do

A properly designed adequacy study — the kind that was begun but never finished in 2004 — would accomplish several things.

First, it would establish an evidence-based cost estimate for providing every Minnesota student with a genuine opportunity to achieve state standards. This would give the Legislature an objective foundation for its funding decisions, replacing the current practice of incremental adjustments to a historically arbitrary baseline.

Second, it would quantify the cost differentials between students and districts, providing a principled basis for the categorical weights and supplements that are supposed to account for higher-need students. Right now, those weights are essentially political compromises. An adequacy study would replace them with research-grounded cost estimates.

Third, it would establish accountability: if the state commits to funding education at the level the adequacy study determines is necessary, it becomes much harder to justify underfunding without confronting the direct consequences for student outcomes.

What Other States Have Done

Minnesota is an outlier. Dozens of states have conducted comprehensive adequacy studies and rebuilt their finance systems around the findings. Some of the most instructive examples:

Wyoming has contracted with a consulting team to recalibrate its education funding model every five years since 2005. Its finance system is explicitly designed to fund the programs and staffing levels that research identifies as effective. The system is regularly updated as costs change and new evidence emerges.

Illinois enacted a landmark Evidence-Based Funding reform in 2017, creating a professional review panel to regularly recalibrate the state's funding model and a balanced accountability committee to monitor outcomes. The reform has driven hundreds of millions of new dollars to the state's most underfunded districts.

Maryland, after commissioning a comprehensive adequacy study, enacted the Blueprint for Maryland's Future in 2021 — committing to a $3.9 billion increase in education funding over ten years, paired with accountability provisions and a mandate to implement effective practices. The Blueprint's five pillars — early childhood education, high-quality teachers, college and career readiness, additional resources for high-need students, and accountability — represent exactly the kind of comprehensive approach Minnesota needs.

In each of these cases, the adequacy study was not the end of the process — it was the beginning. It provided the factual foundation for legislative action.

The Ask: Finish What Was Started in 2004

Minnesota's first immediate priority should be to commission the adequacy study that was terminated twenty years ago. The study should use both the Evidence-Based Funding methodology and the econometric approach pioneered by Dr. Baker's team, so that the Legislature has the benefit of both perspectives. It should be completed within eighteen months and used as the basis for rebuilding the basic funding formula.

This is not a radical ask. It is, in fact, the minimum that responsible governance requires: before deciding how much to spend on education, determine how much it actually costs.

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Next in the series → Post 4 of 8

Funding Students, Not Just Schools — Even if Minnesota sets its overall funding at the right level, the money won't reach the students who need it most without a dramatic overhaul of how funding is weighted for student characteristics. The next post explains why per-pupil funding must reflect the real, higher cost of educating children facing poverty, language barriers, disability, and other challenges — and what that means in practice.

Twenty Years of Unheeded Warnings: Leaving Children Behind

Post 2 of 8 • Minnesota Education Finance Reform

This is the second post in an eight-part series on reforming Minnesota's K–12 education finance system. The series is based on the Research Appendix drafted for the 2025 MDE Task Force on Education Finance. Start with Post 1 for an overview of the series and why it matters.

Twenty Years of Unheeded Warnings

Report after report has reached the same conclusion. Why hasn't Minnesota acted?

By Gerald Von Korff • jvonkorff.com

Imagine receiving the same diagnosis from twelve different doctors over twenty years — and choosing, each time, not to begin treatment. That is essentially the story of Minnesota's response to its education funding crisis.

Since the early 2000s, a remarkable parade of task forces, academic studies, federal reserve analyses, university researchers, and legislative auditors have all reached the same conclusion: Minnesota's school finance system is structurally inadequate for the students who need it most, and the achievement gap that results is not closing. In some respects, it is growing.

Understanding this history — the pattern of diagnosis without treatment — is essential context for understanding why the reforms this series advocates are so urgent. This is not a new problem awaiting a new solution. The solutions are known. What has been missing is the sustained political commitment to implement them.

The Reports: A Parade of Warnings

2004

Governor Pawlenty's Blue-Ribbon Task Force

Governor Pawlenty convened a task force chaired by Superintendent Rick Dressen, which acknowledged that "Minnesota has one of the largest achievement gaps in the nation." The task force recommended a cost-based funding formula sufficient to ensure all students could achieve state-specified academic standards — and was authorized to commission a national expert to calculate exactly how much that would cost. The study was nearly complete when the Governor terminated the task force's work. Minnesota is perhaps the only state that initiated, and then stopped, a funding adequacy study before it was finished.

2004

Minnesota Taxpayers Association Adequacy Study

Commissioned by the Minnesota Taxpayers Association and financed by business groups, this study used sophisticated statistical modeling to estimate what adequate funding would cost. It found that the cost of an adequate education varied from roughly $6,200 to over $14,000 per student depending on student characteristics — a more than two-to-one differential. Its conclusion, notably, was that closing the achievement gap through adequate funding would be "cost prohibitive" and "politically unfeasible." The study's own authors, however, cautioned that it could not be used as a basis for actual policy without further work to define adequacy and involve stakeholders.

2009

Minnesota Budget Trends Commission

This commission warned of a rising dependency ratio as baby boomers retired and the workforce shrank. Its solution: Minnesota must urgently address educational attainment gaps in the K–12 system, because those students would need to support the state's future economic growth. "We will need to utilize the talents of all of our younger citizens," the Commission wrote, "no matter their family income, race, or ethnicity."

2011–2013

Governor Dayton's Task Force

This task force repeated the warnings of its predecessors: "There are wide gaps in reading and math proficiency by race and by economic status. Little progress was made in closing these achievement gaps between 2006 and 2010." Its recommendations focused largely on reallocating existing resources rather than adding new ones, as the state faced significant fiscal constraints. Some of its proposals — including all-day kindergarten — were eventually enacted. The achievement gap, however, persisted.

2016

Minnesota Education Equity Partnership (MnEEP)

MnEEP connected the dots between Minnesota's achievement gap and its economic future. As the state's student population was becoming more diverse — more students of color, more English Learners, more students from low-income families — the proportion of students not achieving educational proficiency was growing. The economic stakes were enormous. Researchers quoted in the report estimated that closing racial and ethnic achievement gaps nationally could make the U.S. economy nearly $2.3 trillion larger by 2050.

2019

Federal Reserve Bank of Minneapolis

The Minneapolis Fed joined the chorus: "Minnesota's education achievement gaps have persisted for decades despite implementing policies designed to close them." This was not an ideologically motivated advocacy report — it was the Federal Reserve, assessing the economic consequences of educational inequity.

2020

Governor Walz's 80-20-10 Report

The most recent gubernatorial task force before the current one documented that test scores had stagnated over twenty years while the percentage of students of color doubled. The report found that the buying power of general fund revenue had declined by 10% over the preceding decade — meaning districts were effectively receiving less money in real terms even as the student population they were asked to serve became more challenging.

2021

Rutgers University / Shanker Foundation National Study

Using the National Education Cost Model, researchers estimated the additional funding each Minnesota district would need to bring students to national average outcomes. The least adequately funded districts included Minneapolis and St. Paul, but also many Greater Minnesota districts — Worthington, St. Cloud, Chisholm — and suburban districts like Columbia Heights and Brooklyn Center. The pattern was clear: districts serving higher proportions of students of color, English Learners, and students qualifying for free and reduced-price meals were the most severely underfunded.

2022

Office of the Legislative Auditor

Minnesota's own legislative auditor concluded: "Minnesota has had long-standing academic achievement gaps, despite efforts by MDE, school districts, and charter schools to implement policies designed to close them." The auditor also documented that the accountability mechanisms in place were toothless — MDE had insufficient staff, insufficient authority, and insufficient tools to actually require improvement from districts that were failing their students.

2022

Federal Reserve Bank of Minneapolis (Updated)

"Data show that Minnesota's public schools consistently underserve students from low-income families, Indigenous students, and students of color." The Fed had to say it again, three years later, because nothing had changed.

The Pattern: Why Has Nothing Changed?

Reading through these reports, a pattern emerges. Each successive effort acknowledges the prior warnings, documents that little has changed, and makes recommendations. Some partial reforms are enacted. But the structural problem — a funding formula that does not cover the actual cost of educating high-need students to proficiency — is never fully addressed.

Why? Several forces are at work.

First, there is genuine fiscal pressure. Adequately funding education for all students is expensive, and Minnesota has faced recurring budget constraints that make large new commitments politically difficult.

Second, there is a strong tradition of local control. Many Minnesotans — including many educators and school board members — are deeply resistant to state-level accountability mechanisms, viewing them as interference with local decision-making. This attachment to local control, however well-intentioned, has allowed persistent failure to continue without consequence.

Third, the students most harmed by this system are also among the least politically powerful. Low-income families, families of color, and immigrant communities have less lobbying capacity than the interests that benefit from the status quo.

"Diffuse local control empowers the powerful, the advantaged, and interests that may be seeking to preserve the status quo."
— Research Appendix, 2025 MDE Task Force

Fourth — and perhaps most fundamentally — there has been a persistent belief that the problem is not really about money, but about practices, culture, or effort. This belief, while containing a grain of truth (money spent ineffectively does not help students), has been used repeatedly to avoid the harder question of whether Minnesota is actually spending enough in the right places. The research, as we will explore in later posts, is clear that it is not.

The Cost of Waiting

Twenty years of inaction has a cost. Each cohort of students who passed through inadequately funded schools represents a generation of unrealized potential — lower graduation rates, lower earnings, greater reliance on public services. The Federal Reserve's concern is not abstract: an undereducated workforce is an economic drag that compounds over decades.

Meanwhile, Minnesota's student population has continued to change. The share of students of color — the students most severely underfunded relative to their needs — has doubled. The problem is not getting smaller while we wait.

The 2025 Task Force represents another opportunity to break this pattern. The research is, if anything, more compelling than it was in 2004. The question is whether this time, Minnesota will act on what the evidence requires.

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Next in the series → Post 3 of 8

The Case for Adequate, Cost-Based Funding — Minnesota is perhaps the only state that started and then stopped a school funding adequacy study before completing it. The next post explains what an adequacy study is, what it would reveal about Minnesota's funding levels, and why rebuilding the basic funding formula on a true cost basis is the essential first step toward closing the achievement gap.

Minnesota's Education Funding Must be Reformed: A Series

Series Introduction • Post 1 of 8

Minnesota Is Failing Its Most Vulnerable Students — And Has Been for Twenty Years

An eight-part series on what the research says, what other states have done, and what Minnesota must do now.

By Gerald Von Korff • jvonkorff.com

Over the past two decades, Minnesota has been warned — repeatedly, by governors, legislators, federal economists, university researchers, and its own auditors — that its public school finance system is failing the students who need it most. Students of color, students from low-income families, English Learners, and students with disabilities are being systematically underfunded. The achievement gap is wide, persistent, and in many respects growing.

And yet, despite report after report, task force after task force, the structural problems remain unaddressed.

In 2025, the Minnesota Department of Education convened a new Task Force on K–12 Education Finance. This post is drawn from the Task Force's Research Appendix — a comprehensive review of twenty years of evidence on Minnesota's achievement gap, what other states have done to address funding adequacy, what the research says about money and outcomes, and what a genuine accountability system looks like.

This blog series draws on that research to make the case — in plain language — for the reforms Minnesota needs. It is written not just for policymakers and educators, but for any Minnesotan who cares about whether our public schools are delivering on their promise.

Why This Matters — and Why It Hasn't Been Fixed

Minnesota has a deserved reputation as one of the country's better-educated states. Average test scores are high. Graduation rates are solid. But those averages mask a deeply troubling reality: Minnesota also has one of the largest achievement gaps in the nation between white students and students of color, between affluent students and students living in poverty.

This is not a new problem. It has been documented since at least the early 2000s. What is remarkable — and troubling — is how little progress has been made despite so many well-intentioned efforts.

"Over the past 20 years, educational outcomes measured by state accountability tests have stagnated with a large, persistent achievement gap while the percentage of children of color has more than doubled from 16% to 34%."
— Minnesota School Finance Working Group, 2020

The reasons for this failure are structural, not personal. Minnesota's school finance system was not designed to deliver proficiency-level education to all students regardless of background. It was built for a different era — one in which schools were expected to provide instruction, not guarantee learning. When Minnesota (and the country) shifted to outcome-based, proficiency-focused standards beginning in the 1980s, the cost of education for disadvantaged students rose dramatically. The funding system never caught up.

What This Series Will Cover

Over eight posts, this series walks through the five reforms the research points to as necessary and sufficient to finally close Minnesota's achievement gap. Each post corresponds to a section of the research memo prepared for the Task Force:

The Eight Posts in This Series

1. Post 1 (this post): Series introduction — the problem, why it persists, and what we'll cover.
2. Post 2: Twenty years of unheeded warnings — the reports, the data, and the pattern of inaction.
3. Post 3: The case for adequate, cost-based funding — why the current formula doesn't work and what a real adequacy study would reveal.
4. Post 4: Funding students, not just schools — why per-pupil funding must be weighted to reflect the real cost of educating each child.
5. Post 5: Evidence-based practices — what works, and why money alone isn't enough without guardrails on how it's spent.
6. Post 6: The accountability gap — why local control has not produced systemic improvement and what a real accountability system looks like.
7. Post 7: Continuous improvement — how states like Wyoming and Maryland build recalibration into their finance systems.
8. Post 8: What Minnesota must do now — the six immediate legislative priorities that would put the state on a new path.

A Word About the Research

This series is grounded in the Research Appendix drafted for the 2025 MDE Task Force, drawing on peer-reviewed academic research, state-commissioned adequacy studies from across the country, federal reserve analyses, legislative auditor reports, and the work of leading school finance scholars including Dr. Bruce Baker of Rutgers University and Dr. Allan Odden of the University of Wisconsin.

I have tried to make this accessible to general readers without sacrificing accuracy. Where I cite studies, they are real. Where I draw conclusions, I try to be clear that they are my own read of what the evidence requires.

Minnesota has the knowledge. It has the research. What it has lacked is the political will to act. My hope is that this series contributes, in some small way, to building the public understanding that makes action possible.

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Next in the series → Post 2 of 8

Twenty Years of Unheeded Warnings — The next post surveys the remarkable parade of task forces, academic studies, federal reserve reports, and legislative audits that have all reached the same conclusion: Minnesota is failing its most vulnerable students, and the situation is getting worse. Understanding this history is essential to understanding why reform is so urgent.