Minneapolis Public Schools forecasts $33 million deficit

Minneapolis Public Schools is facing a $33 million deficit for next school year, officials say, another blow for a district that has grappled with back-to-back multimillion-dollar shortfalls.

"Difficult reductions we all made last year have brought us closer to our goal of a balanced budget, but our basic infrastructure — the programs and services we offer — continues to outsize available resources," Superintendent Ed Graff said in an e-mail to all staff Friday.

The $33 million shortfall for the 2018-19 school year includes inflationary salary expenses and benefit costs, plus a carry-over $16.5 million deficit identified this summer, officials say. District officials will embark on more cuts, but unlike last school year's trims, these will be larger-scale.

"The district has cut as much as it can at a small level, and now we need to look at bigger changes," said district spokesman Dirk Tedmon.

Minneapolis Public Schools, the state's third-largest school district, has had budget deficits for most of the past decade. Many urban districts face shortfalls, including the St. Paul Public Schools, which in March announced a $27.3 million deficit for this school year.

Cuts to be considered might include a reduction in the number of school calendar days, Tedmon said. He added that according to the superintendent at a recent board meeting, the district is looking at all options.

Enrollment losses have contributed to the district's tumbling funding over the years. A recent Star Tribune analysis of enrollment data found that one in three Minneapolis school-aged kids doesn't attend Minneapolis Public Schools, instead picking charter schools or public schools in other districts.

The district's central office is "bare-boned right now in many, many areas," said district finance chief Ibrahima Diop.

Minneapolis schools leaders broke the news of the latest budget gap early to boost transparency, Diop said. Community meetings will be held this fall to discuss the budget, and the district has said it will release its comprehensive district assessment in the spring.

"The sooner we come up and notify the community of that deficit, I think, the better off we are in terms of finding solutions to fix it," Diop said.

In addition to personnel costs, Graff identified other factors in his e-mail to staff, including rising federal and state mandates, increases in fuel, transportation and utilities and "insufficient state support for public school funding which has disproportionately hurt urban districts like MPS."

The Minneapolis district is taking a hit in large funding subsidies for special education and English language learners, officials have said. School board treasurer Jenny Arneson called it the "cost of doing what's right."

"Until we address that issue, public education — not just in Minneapolis, but throughout the state — will struggle to have structurally balanced budgets," she said.

In February, facing a $28 million deficit for this school year, Graff announced a 10 percent cut to central services and a 2.5 percent trim in allocations to schools.

Those cuts did not close the gap.

Budget tightening prompted cuts to nearly 300 full-time positions districtwide, according to district projections in April.

By the end of this year, district reserves will be at $25.5 million, Graff said in his e-mail — roughly half of its targeted amount.

Minneapolis isn't the only district struggling to cut costs, said Scott Croonquist, executive director of the Association of Metropolitan School Districts.

"A number of districts are looking at budget challenges and are going to be facing similar types of questions and options that they'll have to look at," Croonquist said.

The district aims to balance the budget structurally "while continuing to prioritize those things that most enhance the academic achievement and well-being of our students," Graff said in his e-mail.

Beena Raghavendran • 612-673-4569