Recent developments in Minnesota’s tax law have opened up new opportunities for child care centers to qualify for property tax exemptions. This article examines the key requirements and implications of this change, focusing on the recent Under the Rainbow Early Educ. Center v. County of Goodhue case.
Key Takeaways
- Child care centers can now qualify as “seminaries of learning” for property tax exemption purposes under Minnesota Statutes, section 272.02.
- Centers must demonstrate an educational purpose, provide broad general education, and do so comprehensively.
- Licensing, curriculum, and quality ratings play a crucial role in qualifying.
Background
Historically, the “seminary of learning” tax exemption applied mainly to secondary and post-secondary institutions. But the Minnesota Supreme Court’s decision in the Under the Rainbow case has expanded this interpretation to include early childhood education centers.
In this landmark decision, the court recognized that an early childhood center could qualify for the tax exemption by meeting the above criteria. The center’s four-star Parent Aware rating, DHS licensing compliance, and comprehensive educational programming were key factors in the court’s decision.
Qualifying Criteria
To be considered a tax-exempt “seminary of learning,” a child care center must meet three criteria: (1) it must have an educational purpose; (2) it must provide a broad general education; and (3) and it must adopt a thorough and comprehensive approach to learning.
(1) Educational Purpose
Centers must show that education is their primary focus. Evidence of an educational purpose includes:
- Mission statements emphasizing learning and development.
- Structured curricula and lesson plans.
- Regular assessments of children’s progress.
(1) Broad General Education
The center should offer a wide range of educational experiences, including:
- Language and literacy development.
- Math and science activities.
- Social and emotional learning.
- Physical and motor skill development.
(3) Thorough and Comprehensive Approach
Centers must show that their educational program is robust and well-rounded. This can be shown through:
- Age-appropriate learning environments.
- Qualified staff with relevant education and experience.
- Adherence to state licensing requirements.
- Participation in quality rating systems like Parent Aware.
- Evidence of compliance.
To support a tax exemption claim, centers should maintain and be prepared to present:
- Detailed curriculum plans.
- Staff qualifications and training records.
- Child assessment documentation.
- Licensing and quality rating certifications.
Practical Steps for Child Care Centers
- Review Your Programming: Ensure your center offers a broad, age-appropriate curriculum that covers multiple developmental areas.
- Document Everything: Keep detailed records of your educational activities, assessments, and staff qualifications.
- Pursue Quality Ratings: Participate in programs like Parent Aware to demonstrate your commitment to high-quality early education.
- Stay Compliant: Maintain all necessary licenses and follow DHS regulations.
- Emphasize Education: Make sure your center’s mission and daily operations prioritize educational outcomes.
Potential Challenges
Make no mistake, while this ruling opens new possibilities, centers will face challenges in proving their eligibility. Common hurdles include:
- Demonstrating that the center’s curriculum is comparable to public school offerings.
- Proving that the center reduces the burden on the public education system.
- Providing sufficient documentation of educational practices and outcomes.
Conclusion
Under the Rainbow represents a significant opportunity for Minnesota’s child care centers to potentially qualify for property tax exemptions. By focusing on educational quality, comprehensive programming, and proper documentation, centers can position themselves to meet the “seminary of learning” criteria. Still, the process requires careful attention to detail and a clear demonstration of educational purpose and impact.
Centers considering applying for this exemption should consult legal, financial planning, management, and tax professionals to ensure they meet all necessary requirements and can effectively present their case to local tax authorities.
Brendan Kenny works extensively in administrative law. This includes helping child care centers navigate the challenges of regulatory compliance, and representing child care centers in regulatory enforcement matters. If you have questions about this or other matters affecting child care centers, please contact attorney Brendan Kenny at 952-746-2139 or [email protected].
