Editor’s note: This is the first in a three-part series that will be running on successive Mondays addressing the issues of state aid for local units of government at the county, city and school level.
“It’s very complicated.”
That was how Vicki Knobloch, Redwood County administrator, began an explanation of what is known as county program aid, which is allocated to counties in Minnesota though the state.
County program aid is distributed to each county based on a number of factors including need aid, tax base equalization aid and transition aid.
The aid formula takes into consideration everything from a county’s population over the age of 65 and the percentage of the population on food stamps to the county’s net tax capacity.
The challenge Redwood County, and others like it, have been facing is a dramatic decrease in that state aid. According to the Association of Minnesota Counties (AMC), county program aid was initially established as a way to help counties keep property taxes low and yet allow those counties to continue providing services to the residents.
As state mandates to provide everything from public safety to human services continued, the intent was for program aid to help fill in the gaps when it came to those required services.
The problem is that the funds to counties has been on the decline for a number of years, which started during those years when the state saw budget deficits.
One of the areas that had been reduced in those years was county program aid, and even in the years when the budget forecast has improved the county program aid allocation has not reflected that.
Over the past 10 years, according to the Association of Minnesota Counties, one third of Minnesota’s counties have lost more than 50 percent of their county program aid.
Since 2005, county program aid in Redwood County has fallen more than 66 percent. One decade ago, the county was receiving a per capita aid amount of more than $48. That amount is now less than $17. According to Knobloch, the issue is that there is a perception that counties like Redwood are more wealthy because of ag land, and that has been reflected in its aid allocation.
Seeing the downward trend in county program aid, the county commissioners made a budget decision that took the state funding source out of the general fund and moved those dollars into its building fund.
“The board made that decision in 2010,” said Knobloch.
The inconsistency of that funding led the board to decide it did not want to have to rely on those dollars for its general fund leading to the change. When county program aid began the statewide allocation was more than $200 million divided up among all 87 of the state’s counties.
A dramatic drop in the overall allocation occurred in 2008, and over the years the amount has fluctuated. While the amount in recent years appears to be near what had been allocated a decade ago, the Association of Minnesota Counties determined with inflation the amount is lower by more than $70 million.
Redwood County is hoping the Minnesota legislature will take a look at a proposal for a new county program aid formula that has been developed by the Association of Minnesota Counties.
The new formula would increase the aid amount by approximately $40 million with the establishment of a funding floor that guarantees all counties receive a minimum of $350,000. Redwood County has been receiving approximately $270,000 in recent years. Learn more about the proposal at www.mncounties.org.
Photo courtesy of Internet public domain