Tessa Otto
This paper quantifies the impact of inflation and economic shocks on school funding formulas in Minnesota, specifically examining the discrepancy between nominal budget increases and the real purchasing power of those funds. Using Nominal State Aid Per Average Adjusted Daily Membership (AADM) data adjusted by the Implicit Price Deflator (IPD), the analysis spans 22 years (FY2003–FY2025). The study confirms that nominal funding increases have failed to keep pace with rising costs, resulting in a severe erosion of real funding capacity.