Facing $33-million deficit, School Board members set budget priorities

District projecting $33 million budget deficit for 2018-19

Minneapolis Board of Education members want district leaders to ensure equity, transparency and fiscal sustainability as they grapple with a projected $33-million deficit for the 2018–2019 school year.

Board members laid out those priorities at their meeting Oct. 10, less than a week after Superintendent Ed Graff told MPS staff about the projected deficit. The board members voiced support for efforts to decrease the district’s growing special education costs and appeared to support Graff’s plan to survey the community as his team prepares the budget.

“At this point we’ve not committed to doing anything other than really trying to explore different areas,” Graff said. “This is a process of exploring possibilities around how we would understand what the values are, in addition to addressing the deficits.”

The projected deficit comes as MPS deals with a $16.5-million budget deficit for the 2017–2018 school year. District leaders projected last February that the deficit would be around $28 million, which led them to cut school allocations by 2.5 percent and central services by 10 percent.

They plan on covering the remaining $16.5 million deficit with reserve funds.

In a letter to district staff, Graff explained that the district’s reserve funds are too low to cover next year’s projected deficit and ensure that the district has enough to pay for an unforeseen emergency. That means the district needs to make cuts or reduce expenses, he indicated Oct. 10.

Graff has laid out potential “big ticket” areas for savings, which could include increasing class sizes, reducing the number of school days and switching to a seven-period day for middle and high schools, among others. He asked the School Board on Oct. 10 if they had any priorities when it came to these items.

Some board members talked broadly about values they’d like to see incorporated into the budget, such as transparency, equity and fiscal sustainability. Several said they would be interested in learning more about the potential for savings in areas such as reducing testing, streamlining transportation and reducing the district calendar.

“This is an opportunity to do things differently, and we must do things differently,” School Board Member Jenny Arneson said.

Cross-subsidies drive increase

Graff said in his letter to staff that cost drivers for the deficit include enrollment declines, insufficient state support, salary increases, rising fuel, transportation and utilities costs and the underfunding of special education and English learning services.

Underfunding in those two areas forces the district to use about $56 million in operating revenue for special education and $6 million–$8 million for English learning services, according to Chief Financial Officer Ibrahima Diop.

“If we didn’t have those cross-subsidies, this deficit would have been taken care of a long time ago,” Diop said.

The state and federal governments are supposed to support those costs, especially as they put more requirements on districts, according to a district spokesman. The state, for example, imposed a mandate last year that limited the number of students special education teachers could have. However, the state did not provide any offset for that mandate and the additional requirements, which cost the district $6 million.

District lobbyist Josh Downham told the School Board that $21 million of that special-education cross-subsidy comes from charter schools and other school districts that bill MPS for services they provide Minneapolis residents. The district has to pay those costs without any regard for the cost or quality of the services provided, he said, adding that he hopes for legislative action on the issue.

Overall, Downham said the chances of a significant legislative investment in special education next session are low. The idea, he said, is to set the groundwork for 2019 and beyond.

School Board members appeared to support Downham’s efforts to reduce the cross-subsidy. Board Member Nelson Inz said he wished the issue would generate more passion and advocacy from the community.

“If we had adequate funding, a lot of our other problems would be diminished quite a bit,” he said.

Board suggestions

Arneson said Oct. 10 that she’s okay with Graff’s goal of a balanced budget by the 2019–2020 school year. She would also be in favor of exploring steps for a referendum in order to increase revenue, she added.

Board Member Ira Jourdain, who represents parts of Southwest, said he’d like to see how much the district spends on testing and staff evaluations and why students leave MPS for other schools.

Board Member Kim Ellison said she’d be interested in looking at the calendar and assessments and what affect class size has on the district’s “high-priority” schools. She added that she’s interested in learning why families choose MPS.

Inz said the district needs to be realistic about requirements from the state when it comes to testing. Board Member KerryJo Felder said she’d like to see better programming in North Minneapolis. Siad Ali said he’d like to hear from Graff and his administration about their priorities.

“From there I will know what’s good for our students,” he said.

Bob Walser, who also represents parts of Southwest, said it was deeply concerning that the School Board didn’t have a “global view” of the 2017–2018 budget until a few weeks before voting on it. He said it would be helpful for the public to see the budget laid out in broad categories.

He and several other board members stressed the importance of the district being able to retain students.

Graff said he’s hoping to compile information on community priorities by the middle of November.

The district is also in negotiation with its teacher’s union and is proposing flexibility in the calendar as part of that process. The MPS calendar is currently 11 days over the state-required minimum, and teacher salaries cost the district $1 million–$1.5 million each day, according to a spokesman.

District leaders and union negotiators are exploring the option of eliminating two days this school year, though nothing has been finalized yet.