Resource: Minneapolis Schools Budget Challenges and Risks

With the Minneapolis Public Schools District facing a $25 million shorfall in the next school year, the finance department presented a preliminary budget proposal March 15.

Among the changes called for in the proposal was the cutting of 50 staff members at the central office, the addition or 12 English as a Second Language teachers, reduction of full-day kindergarden at some schools and the shifting of funds between different accounts.

What do you think of the budget proposal? Take the district's survey.

The following information was provided on the school district's website, and details some of the challenges and risks the new budget proposal presents:

(The information has also been attached as a PDF to this article.)

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Budget Challenges and Risks (Updated 3-19-13)

MPS faces numerous budget challenges.

Funding uncertainty: MPS, like most school districts, must make major decisions about the next year’s budget in February and March. However, the legislature is not expected to make final decisions about the state’s budget until sometime in May. Therefore, school districts must make decisions and commitments to students, families and staff well before we know what our resources will be.

Funding restrictions and flexibility: MPS must make strategic investments to close the achievement gap while raising achievement for all students. At the same time, the school district must maintain basic services. A key challenge is to effectively manage both operational and strategic priorities. This challenge is made even more severe because just over half of MPS’ general revenue funds are categorical, meaning they have restrictions on how they can be used. This limits our flexibility to solve problems and address needs.

How enrollment impacts revenue: The state of Minnesota uses a weighted student formula, providing different funding for students at different grade levels. The current weights are:

Kindergarten = 0.612

Grades 1-3 = 1.115

Grades 4-6 = 1.06

Grades 7-12 = 1.3

After a decade of declining enrollment, enrollment at MPS is starting to increase. However, since we are experiencing more growth in primary and intermediate grades, our revenue is not projected to increase as much as it would if more of the enrollment increase were at the secondary level.

Fixed and variable costs as enrollment changes: Some costs are directly tied to enrollment. For example, if class size remains constant, as enrollment declines the school district needs fewer classroom teachers.

However, some costs are not directly tied to enrollment. Some functions – for example, the cost of property insurance or the cost of heating the administration building – remain constant whether enrollment goes up or down. Other key business functions, such as payroll, finance, human resources and communications, may change over time with large change in enrollment, but exactly when and how much is not easy to determine.

Cost of unoccupied buildings: MPS has not always been able to sell or lease closed school buildings. In spite of an aggressive building reuse effort, the school district retains 10 closed school buildings and about one million square feet of unused space. We continue to incur costs for this space because we must heat the buildings enough to prevent the pipes from freezing and maintain the properties by shoveling snow in winter, mowing lawns in summer and doing other basic maintenance.

Transportation: MPS offers students and families school choice. This enables families to select the educational programs that are best for their students. However, this choice also necessitates a complex and expensive transportation system. MPS provides over 450 bus routes a day.

Labor costs: Salary and benefits account for almost 82 percent of the school district’s general fund budget. As revenue has gone down, these costs continue to rise. Collective bargaining agreements make it difficult for MPS to restructure jobs and contain costs.

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More resources:

• Where Does Minneapolis Get its Public School Funds?
• Resource: Understanding Property Tax Levies
• Resource: What is a District's 'General Fund' Balance?

Other related articles:

• Why Is the School District Drastically Cutting Local School Budgets?
• What Could Your School Lose?
• Parents Ring Alarm Bells Over "Catastrophic" Schools Cuts

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