This two-part report presents findings of a study that examined how Minnesota's tax dollars are being spent, with a focus on elementary-secondary education. Part 1 uses national indicators to compare Minnesota with other states. The second part examines actual education expenditures in Minnesota for the period betweeen 1985 and 1991. Findings show that total compensation, salaries and benefits combined, is the largest component of spending for elementary-secondary education. Although student-teacher ratios are slightly lower than the national average and average teacher salaries increased 15 percent between 1985 and 1991, other states are eclipsing Minnesota's efforts. Although capital expenditures far exceed the national average, there will continue to be a need for even more capital investment. Special education has seen the most significant increase in spending. Finally, useful national data on achievement and other outcome measures are needed to evaluate educational status. Twelve tables and two charts are included. Appendices contain a description of methodology, statistical tables, definitions, and a list of other publications available from the Office of the State Auditor. (LMI)