How Minneapolis Public Schools Could Weather Expected Budget Shortfalls

After years of claiming they’ve already cut to the bone, how are Minneapolis Public Schools preparing for more possible cuts and an unavoidable $10-30 million deficit?

Governor Mark Dayton's newly-released budget proposal promises an increase in education funding for the first time in many years. But the plan relies significantly on tax hikes that would have to make it past a tax-averse state legislature, meaning the increase is far from certain.

If Governor Dayton’s promised $37 million increase to the state education budget doesn’t make it through the state legislature alive, the district could lose up to $10 million in regular funding and integration funding, a significant source of revenue for urban districts like Minneapolis that isused to pay for things like busing and staff costs at magnet schools. Minneapolis Public Schools finance chief Peggy Ingison said her team was preparing for that possibility.

The Republican controlled legislature, which is dealing with it’s own $6.2 billion deficit, could also be tempted to take a bite out of the juicy education budget, which made up 29 percent, or $13.3 billion, of the 2010-2011 state budget.

The first place administrators might look for more money are the district’s cash reserves, also called the “fund balance,” which the district keeps to help see it through any immediate crises. The district has $104 million in reserve, or about 20 percent of the projected budget. That’s better than most of their peer districts around the state. But that money is also a one-shot deal. If it’s used to cover cuts in state funding, it’s gone forever.

Even if the district avoids more cuts, they’ll still face a budget deficit of between $10-30 million.

“We're on track to under-spend our budget,” said Ingison. The problem is, Ingison and her team aren’t quite sure what’s causing the underspending. They’ve got to be prepared that savings from unfilled staff positions, unseasonably low utility costs or other areas could disappear on short notice.

Minneapolis schools spokesperson Stan Alleyene wouldn't specify what the district's options were if the district faced more severe cuts, and in an email lamented that the school district will have to complete its budget process for the 2011-2012 school year without having a firmer idea of what funds it will get from the state. Much of the district's fate rides on the decisions made in this legislative session.