Minneapolis school board OKs budget changes, tax levy, high school start times

Minneapolis Public Schools on Tuesday approved a budget amendment to address rising transportation and food costs, certified the maximum property tax levy, voted to raise the district's debt-service level and approved a universal start time for the city's high schools for next fall.

The meeting was the last for the current school board — five new members will be sworn in next month — and included a presentation outlining stark financial projections.

District finance leaders repeated their message: Minneapolis Public Schools is headed for a fiscal crisis — and without significant budget changes, the district is on track to run out of money in 2025, according to a five-year forecast first presented at a finance committee last month. Since state aid is doled out per pupil, enrollment declines have further stretched a budget balanced with federal pandemic relief dollars that sunset in 2024.

"This shows us that we need to change course, and that's exactly what we'll all do together," said Interim Superintendent Rochelle Cox, who will serve in the role until July. Her job, she said, is to set the new district leader up for success. That requires laying out the options ahead, which likely includes conversations about consolidating schools.

The projection is not meant to prescribe solutions, district leaders said, and recommendations were not made at Tuesday's meeting.

Board members voted to increase the tax levy by 4.34% for 2023 and passed a budget amendment to address rising transportation and food costs. The cost of contracted transportation services has jumped nearly 50%, district officials said, requiring an additional $16.5 million.

Declining enrollment and the end of federal free lunch waivers — which, as a part of pandemic relief to districts, allowed schools to distribute free meals to students without verifying their families' income — has drained the district's food service fund, requiring a $5 million transfer from the general fund to fill the gap, according to budget amendment resolution.

An independent audit of the district's finances, presented Tuesday, found that Minneapolis Public Schools' spending of federal pandemic relief funds was in compliance. The audit also found a "significant deficiency" in the segregation of accounting duties, which helps minimize the chance of error and fraud.

"We've had that finding for many years now," said Ibrahima Diop, the district's senior finance officer, who added that a "very thin staff level" in the finance department has led to issues, including in payroll.

The school board voted Tuesday to increase the debt service level from 15% of the district's total operating revenue to 20%. Finance department leaders recommended the policy change, pointing to the rising price of capital projects. For example, the cost of the new $88 million career and technical education center at North High School has jumped by more than $12 million since plans were drawn up two and half years ago.

Cox reiterated that there are "no single fixes" to the district's financial issues, but the district should continue lobbying for additional state and federal aid, particularly to fill gaps in costs and revenue for special education and English language learning services.

If the district received full reimbursement for the cost of those services, it would have an additional $70 million per year, Cox said.

Addressing the "chronic underfunding of public education" is a "critical piece," Cox said. "But it can't and won't fix things on its own."

Cox promised to involve the community in the district's next steps. "We will come out the other end of this fiscal challenge as a stronger MPS," she said.

Also approved on Tuesday was a resolution to set a universal start time of 8:30 a.m. for Minneapolis Public School high schools beginning next fall in a bid to ease scheduling and transportation issues for students attending the district's three career and technical education centers.