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Pequot Lakes Schools Poor Despite Pricey Lakeshore Properties
By Rachel Reabe
March 17, 1998
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At first glance it would seem like a school boards' dream come true: a small school district filled with luxury homes whose owners pay hefty property tax bills. But it's a major problem in Pequot Lakes, north of Brainerd.

IF YOU FLEW OVER PEQUOT LAKES, just north of Brainerd, you would see as much water as land. This is the heart of Minnesota's vacation country, where summer cabins outnumber year-round homes two to one. In the middle of all this pricey lakeshore is Pequot Lakes, a modest, mostly low-income community. The combination causes problems for the Pequot Lakes School District. The region's expensive summer lake homes give the district a fat tax base, but as a result, Pequot Lakes schools receive much LESS money from the state. Only about 20 percent of the school budget in Pequot comes from the state, compared to 60 percent state money for the average Minnesota school district.

Marjorie Luce: I can't stand it because it's just not fair.
Pequot Lakes School board member Marjorie Luce says lavish, million-dollar summer homes stretching along the shores of the Whitefish Chain or Gull Lake don't mean the year-round residents are wealthy. Move away from the lakes and you find the homes of the year-round residents, built on a much more modest scale. The average family income in the Pequot district ranks in the bottom 20 percent statewide. Marjorie Luce says it doesn't make sense to reduce school aid.
Luce: Although our assessed valuation is very high here, our average income is low because we have no industry. The community is made up of mostly retired people, seasonal workers, people who work in the forests.
Luce says Minnesota's school funding formula should take into account the ability of local residents to pay. When Minnesota's school funding formula was overhauled 25 years ago, the goal was equal educational opportunity for every student. Whether a district was located in a wealthy metropolitan suburb or a poor, rural county, a blend of local property taxes and state aid provided each the same amount of money per student.

Gary Olson of the Minnesota Department of Children, Families, and Learning says the system works well for most of Minnesota's 353 school districts, but not all of them.

Olson: The funding formula is doing what it's supposed to in terms of equalization. The problem is essentially for Pequot Lakes - they are in an extremely unusual situation.
Unusual for several reasons. Most of the money for Pequot schools is raised locally. About two thirds of that "local" money comes from summer homeowners who don't use the schools. The other third comes from year-round residents already complaining of tight budgets. Pequot Lakes residents DID pass a $5 million bond issue a couple of years ago to build onto their school, but superintendent Jim Oraskovich says it wasn't easy.
Oraskovich: We had to tell our people those dollars would be coming out of their tax levy. If we were another district, we would say we need a building - if we pay 40 percent of the cost, they state will pay 60 percent. It's much easier to sell a referendum if you can tell them the state is paying the biggest part of the share.
But that's not the case in Pequot Lakes. The district, with l,200 students, has been innovative in its attempts to do more with less. The bus fleet converted to propane because it's cheaper than gas. Instructional costs per student are lower than neighboring districts and less than the state average.

As the high school concert choir warms up, music teacher Karen Jacobson says the staff has to spend a lot of time talking about how to deliver quality education on a shoestring.

Jacobson: It's frustrating for me because I just want to teach the kids. I, as a teacher, don't want to have to worry about the money. We don't waste a dollar here. We are very careful about the dollars, and we want to use those dollars for the students.
Despite the tight finances, Pequot Lakes has a good reputation for quality education. Ninety students from neighboring districts opt to attend school here using the open enrollment program. Anywhere else, that would mean an extra $200,000 in state aid. Pequot Lakes doesn't get that money because of the state funding formula.

State Representative Kris Hasskamp, who represents Pequot Lakes, says it's an obvious flaw in the system.

Hasskamp: They're actually penalized because the students come in and their taxpayers have to pay for them. They're absolutely in a no-win box that is very unfair but has been very difficult to deal with the current system because you would have to tip it upside down and start over, and that is almost an impossibility.
Hasskamp convinced last year's legislature to allow Pequot to collect state aid from students attending their school under open enrollment. It was vetoed by the govenor.

Superintendent Jim Oraskovich says they will continue their efforts to modify Minnesota's school funding formula. In the meantime he says his district will continue to find creative ways to provide good education for students in spite of the state.