A “challenging” budget process is underway for Minneapolis Public Schools, according to Interim Superintendent Rochelle Cox, at her last meeting in that role with the board’s finance committee on Jan. 16.  Despite a “historic” increase in State education funding last spring, the district expects its revenue next school year to decline by more than $90 million because federal pandemic aid will expire and enrollment has continued to decline. As revenue declines, the district expects its expenses will increase by $28 million.

The district spends more than three of every four dollars on salaries and benefits for district employees. Trimming more than 15% from the district's budget will almost certainly mean reduced budgets for schools, and job losses for some of the district’s 6,600 employees next year. But these difficult realities were not directly discussed at the finance committee meeting.

Closing the $116 million gap between the district’s projected revenue and expenses falls to the budget committee, which is made up of a group of district employees. The committee should have finalized budgets for principals for next school year on Feb. 13, although the release could be delayed a week, according to Thom Roethke, executive director of budget and planning.

In attendance at the meeting were finance committee chair Abdul Abdi, board chair Collin Beachy, Ira Jourdain and Joyner Emerick. Director Sharon El-Amin was absent.

There were no details shared at the meeting of how the district plans to close such a significant budget gap.

“I don't have anything I can share with you today about how reductions will be done or anything like that, but we are very much engaged in the process right now,” Roethke told the committee.

Abdi said that he would like for the school budget allocations to be shared at the next finance committee meeting before they are shared with the full board. The February finance committee meeting has not been scheduled yet.

Ibrahima Diop, senior officer of finance and operations, said, “I would have to remind you all that when we got these federal dollars, we did say the district decided to continue operating without reducing [its expenses], even though we were experiencing declining enrollment. And the argument that was put forth at that time was that why would we reduce workforce when we do have hundreds of millions of dollars, especially in a time of a pandemic?”

In addition to propping up the district’s budget, it also squirreled away about $30 million of the federal pandemic aid in its reserves, according to Diop.

“We were accused by several groups of having money that we were sitting on, as if to buy new cars or something. That was not the case. We were doing it as responsible financial managers to make sure that after these federal dollars [are gone] we don’t have a steep hill to climb,” Diop explained.

Diop added that during his tenure in the district since 2016, budget cuts of $30 million per year were the norm. “If you would combine those three years [the district didn’t make cuts], then you get the ninety million,” he said.

Jourdain echoed Diop, noting the district has faced budget cuts before. “We do have to close schools. You know, a lot of the stuff is not going to be popular at all. You thought the [Comprehensive District Design] was unpopular?”

Cox offered thanks and words of hope at the meeting. “On behalf of MPS, I want to thank our federal delegation and President Biden for the American rescue plan, especially those ESSER funds that supported schools,” Cox said. “Next year's budget will be built with a hopeful context, a vision of a transformed MPS on the horizon, an MPS that can achieve its mission and vision in a fiscally and operationally sustainable way.”

Both Cox and Diop thanked the finance department staff who are working to develop the budget for next year.

The budget development process is happening at the same time the district is negotiating with its largest union, the Minneapolis Federation of Teachers. The union has asked for a 16% pay raise over two years, retroactive to July 2023, plus additional changes to things like classroom sizes that the district estimates would cost an additional $115 million.

Educational support professionals, represented by the Minneapolis Federation of Teachers, are also in contract negotiations. They have asked for pay increases of 30%, automatic promotion to the next step on the pay scale each year, paid vacation time, amongst other changes to their contract. The district has not yet shared estimates of what these changes would cost.

In the district’s financial projection, it has assumed its labor costs will increase 2.5% per year.