School district has budget gap

$19 million gap projected for 2020–21

Minneapolis Public Schools will need to make budget cuts or find operational savings for the 2020–21 school year because of a $19.1 million budget gap.

The district, which operates 17 schools in the Southwest Journal’s coverage area — Minneapolis west of Interstate 35W and south of Interstate 394, plus Bryn Mawr — expects operating revenue to total $618.9 million and operating expenses to total $645.5 million, according to an initial budget forecast. It’s already set aside $8 million in reserves for next school year, but a $19.1 million gap remains.

District leaders have said the gap is due to rising wages, increasing benefit costs, a decrease in state aid driven by declining enrollment and decreasing property tax revenue due to an error that caused property tax revenue to be higher in 2019. They said it’s also due to structural education-funding issues, notably a $56 million special education funding gap that’s the largest in the state.

They have already made plans to cut the equivalent of 34 full-time teaching positions for next year because of a projected 2.1% drop in districtwide enrollment. But even if enrollment were to hold steady, the district would still have a $12 million to $14 million budget gap, CFO Ibrahima Diop wrote in an email.

That budget gap would increase to $29.5 million for 2021–22 and $71.9 million by 2024–25 without cuts or other structural changes.

Diop said the district will make its determinations about cuts and any structural changes after the School Board discusses its values next month.

School Board Director Jenny Arneson, who represents Northeast and the university area and is board treasurer, said the gap isn’t surprising, given the outcome of the 2019 state legislative session. The DFL-controlled House and Republican-controlled Senate approved 2% increases to the basic student-aid formula in each of the two years, which was below what the Minneapolis district had hoped to see.

Arneson also said she appreciates that district staff are being up front about the budget gap.

The projected budget gap is the district’s third in four years. In spring 2017, the district made a 10% cut to its central services and trimmed school allocations by 2.5% because of a $28 million gap. In spring 2018, it made further cuts to its central-office and school allocations due to a $33 million gap. It also changed bell times at over 20 schools, which led to transportation savings by allowing fewer buses to run more routes.

Operating revenue covers most of the district’s expenses, including salaries, transportation, maintenance and supplies. The district also has funds to cover major capital projects, debt service, food service and community education, but state law bars it from using those funds to cover general operating expenses.

The School Board will vote on the budget in June.