MPS has $28-million budget gap

Minneapolis Public Schools

Minneapolis Public Schools has a $28-million budget gap for the coming academic year, Superintendent Ed Graff wrote in a letter to the School Board.

Graff wrote that his plan to address the shortfall includes reducing school allocations by 2 1/2 percent. His plan also includes reducing central services by 10 percent, a move that will include “significant restructuring of our Academic services, as well as reductions to Central Office staff and staff funded centrally who may work in schools.”

In addition, his plan includes tapping into district reserves, which currently stand at $54 million, to cover the remaining gap. That would bring the reserves to between 5 and 6 percent of the total budget, something the district would work to rebuild over the next four years.

Graff wrote that the goal is to have a structurally balanced budget by the 2019-2020 school year, something he wrote that the district has not had since 2010-2011.

Last year’s audit found a $21-million shortfall midway through the school year, Graff wrote. Auditors have uncovered midyear shortfalls totaling anywhere from $326,000 to $38 million over the past five years.

For the coming year, Graff wrote that he directed his team to take a “dramatically different approach to our budgeting by identifying our budget gap on the front end of the budget cycle, rather than overpromising and scrambling to address a mid-year shortfall when it surfaces.”

He wrote that there “a number of reasons for the gap but that cost drivers include everything from increased special-education compliance costs and salary increases agreed to in last year’s contract negotiations to additional transportation costs and inflationary increases.”

Graff, who started as superintendent in July, wrote that he has directed his team to lead districtwide conversations about the “underlying delivery models for which we currently budget.” He said the district needs to evaluate its facilities’ footprint, transportation costs, the adult-to-student ratio, staffing mix in schools and ultimately, “the programs that are effectively driving achievement and improved academic outcomes for our students.”

“These conversations are urgent and are the only path forward if we are to meet the goals and objectives set in the District’s Strategic Plan ‘Acceleration 2020,'” he wrote.

MPS projects it will have $585.9 million in revenue in 2017-2018, including about $225 million available to schools.

School Board chair Rebecca Gagnon said Graff has been “very much on top of” the situation and is trying to end this school year without a deficit. She said it’s hard to know right now how the plan for next will actually affect each school, since schools draw funding from different revenue sources.

She said it was “disheartening” to hear of the shortfall after hearing from staff last year that issues of underbudgeting and incorrect budgeting had been addressed. She added that the district could reach out to outside partners for help and that it will have to look at “creative” ways to fill budget gaps.

“It’s going to be a tough couple of years,” she said. “Everyone’s going to really have to support the superintendent’s commitment to fiscal stability.”

Graff sent an email to all MPS staff Thursday afternoon that included his letter to the School Board. In that email, he said decisions would be determined after budgets are out March 1. Budgets are due back March 24, he wrote.

In his letter to the School Board, Graff encouraged all School Board members to attend the School Board Finance Committee meeting at Thursday at the Davis Center.

At the meeting, School Board member Nelson Inz said he was grateful that Graff was being honest and up front about the situation.

In a letter to the Field Regina Northrop Neighborhood Group, he and School Board member Jenny Arneson wrote that the district subsidized special education and English-language-learner services by over $60 million last year.

“This is far and away the most of any district in the state,” they wrote.

About 24.5 percent of MPS students qualify as English learners and 17.2 percent qualify as special education, according to Minnesota Department of Education 2016 enrollment data. Inz noted that MPS is also one of few districts that will educate English language learners who are adults, something for which it doesn’t receive funding.

MPS Chief Financial Officer Ibrahima Diop said Thursday that historically, special education has not been fully funded, something that’s a reality nationwide. He said the district will need to spend another $6.5 million on special education in 2018 because of a change in caseload requirements.