A substantial portion of the May 9 Minneapolis Public Schools board of education meeting was devoted to the district’s budget for next school year. The board will vote on a budget resolution on June 13, days before a State deadline for the district to pass a balanced budget.
The district cannot finalize its budget until the Legislature completes the education omnibus bill. Currently, that bill is in conference committee, and House and Senate leaders remain in negotiations.
Most recent estimates show the district will receive around $30 million in additional State funding in fiscal year 2024, which begins July 1, 2023. Along with that new funding, the State is also likely to impose new costs on the district next year, some of which are not yet known.
Additional State funding will not be sufficient to replace the one-time federal pandemic relief funds the district has used to balance its budget for the past three fiscal years.
Since the 2020-21 school year, the district has been using federal and State pandemic relief funds to balance its budget as costs increased, enrollment declined and the district avoided reducing staffing and programming. Next year, the district will use around $80 million of these one-time funds, called ESSER funds, to balance its budget.
Director Ira Jourdain asked, “The ESSER funds that run out… the State funds that we are receiving, they will be used to kind of plug the ESSER funds that run out? Is that what I heard?”
Senior Finance Officer Ibrahima Diop replied that this is not true, saying, “The money from the Legislature is not commensurate with the funding we received in ESSER. The State money will not cover for ESSER.”
The most recent estimate of new State funding the district can expect next year is $30 million.
Director Joyner Emerick asked how much school allocations might decrease in 2024-25 when the one-time pandemic funds have expired. Budget Director Thom Roethke would not give specifics, but did agree with Emerick that it is “reasonable” to assume that school allocations would decline in 2024-25 if the district continues to operate the same number of schools and programs.
Interim Superintendent Rochelle Cox said, “That’s where the hard choices come. We here at central office have always run on making sure the funds go to the students and the students are at the center. That will be a philosophy next year when we have to make hard choices as ESSER monies go away.”
Based on back-of-the-envelope calculations, Minneapolis Schools Voices estimates that about 13% of school allocations next year are directly from one-time pandemic funds. This includes $47 million in per pupil funds to all schools, $29 million in funding for intervention triads, $4 million in funds for schools where enrollment does not cover the full cost of basic staffing, and $700 thousand in funds to assist schools where enrollment is below 250 students. Roethke noted that the district does not have enough learning loss funds left to cover the full cost of the intervention triads.
Unemployment insurance benefits for hourly school workers could cost the district over $8 million next year. The State is not providing any additional funding to cover these costs.
Roethke said the district expects to spend up to $8 million to cover the cost of a provision in the omnibus education bill, currently in conference committee, that will allow hourly school workers, including ESPs, bus drivers and culinary workers, to collect unemployment insurance benefits during winter and summer breaks. The actual cost could be as low as $4 million and will depend on how many eligible employees utilize the new benefits. The district expects eligible workers to be able to collect $4,700 per year, on average. This provision has been a priority for the unions representing these workers, and has been supported by several current school board members and local legislators.
Roethke explained school districts are currently able to levy for their unemployment insurance costs, and that districts pay the full costs of any benefits employees collect. As currently written, the new provision would prohibit districts from levying to cover the cost of unemployment benefits for hourly school workers.
Director Kim Ellison said she supports the unemployment insurance provision, but noted that without additional State funding, “It’s coming out of the classroom.”
Diop called the provision “an unfunded mandate” that will increase district costs when it is already using one-time funding to pay its operating expenses. He asked the board and the public to continue to advocate for the district at the Legislature.
On the night of Thursday, May 11, two days after the board meeting, the legislature released a revised bill that would include $135 million for districts to use to cover the cost of expanded unemployment insurance. As of the time of publication, it is not clear whether this funding will cover the full cost to the district.
Other legislation will further increase district costs.
The district has not yet shared an estimate of other cost increases likely to come from bills under consideration at the Legislature. Other education provisions that will increase district costs include paid due process time for educators and staff who serve special education students, paid professional development for non-licensed special education assistants, and any impact on compensatory revenue that could happen from the universal meals program.
Non-education legislation that may impact district costs includes the costs of a new paid family and medical leave program, and paid sick and safe time. The current paid family and medical leave legislation includes a 0.7% payroll tax increase, which will be adjusted annually to keep the program fully funded. According to fiscal analysis by the Legislature, some State agencies expect the cost of hiring temporary replacement workers while employees are on leave to be significant. The Legislature did not estimate any impact of the legislation on school districts.
The district is assuming a vacancy rate of 5%, and using the expected $27 million in vacancy savings as part of the one-time funding to balance the district budget next year.
Roethke shared for the first time that the proposed budget assumes $27 million in “vacancy savings” to balance the budget in 2023-24. Vacancy savings are the amount the district budgets to spend, but is unspent because some jobs are unfilled during. The budget for next year assumes a 5% vacancy rate districtwide.
The new universal school meal program will not eliminate the $4.3 million deficit in the food service fund. The program may lead to a decline in compensatory revenue in future years.
Under a new State law, all students will receive free breakfast and lunch at school starting next school year. However, this program will not alleviate the deficit in the food service fund for Minneapolis Public Schools. The district will use $4.3 million from its general fund to cover the expected deficit in the food service fund next school year.
“The primary reason for that [deficit] is scope. We’re running like sixty-nine kitchens and that’s expensive,” Roethke explained.
As previously reported, about 20% of Minneapolis Public Schools students who receive free or reduced price meals submit paper forms to qualify for the program. Under the universal meals program there is uncertainty whether caregivers will continue to complete these forms, and whether that may reduce the amount of compensatory revenue the district receives.
The Legislature must complete its work by May 23, 2023. When the education legislation is finalized, the district can update the budget proposal for next year in advance of the June 13 board vote.
The Minneapolis Public Schools board of education will meet again Tuesday, May 16 for a special business meeting about the superintendent search. This meeting will begin after the Finance Committee meeting. Finance Committee meetings are not streamed or recorded for the public. Minneapolis Schools Voices remains committed to covering Finance Committee meetings because of their importance to the public.