State budget help too late to head off some school cuts

Minnesota school districts are welcoming the Legislature's boost in school spending but are still sorting out how much it will help to stave off budget cuts for the coming school year.

The two-year state education budget includes $554 million in new spending, with money earmarked for budget gaps in special education, English-language services, programs aimed at diversifying the teaching ranks and, most notably, an increase to the amount of money that flows from the state to school districts for each student enrolled. The per-pupil funding formula will go up by 2.45% next year and 2% for the following school year, the largest increase in a decade and a half.

For the many public schools that faced a drop in enrollment and a surge in expenses during the pandemic, those increases were good news. But by the time the Legislature worked out the details, districts had already finalized their budgets for the 2021-22 school year, with many sending out layoff notices and telling families about program cuts and other reductions.

Now, less than two months before classes resume, school leaders are recalibrating for their new budget reality, figuring out where they can adjust — and where it's too late to avoid cuts.

"For school districts in general it's probably been one of the more challenging years to come up with a budget and feel like it's done," said DeeDee Kahring, executive director of finance and business for Wayzata Public Schools.

The increase in the per-pupil funding formula, the basis of districts' overall budgets, came as a surprise to many school administrators who had expected that pandemic-related shortfalls and political disputes might derail a school spending package.

At the State Capitol, there had been plenty of room for disagreements on both money and policies ranging from private-school vouchers to social studies curriculum standards. Lawmakers also had sharp disputes over how much the state should spend on schools next year, given the more than $2.6 billion in federal relief money that's been made available to Minnesota schools during the COVID-19 pandemic.

In the end, most of the policy items unrelated to the budget were cut from the bill, as well as some spending proposals on smaller-ticket items.

"The vast majority of new funding went on the formula, which we're certainly happy with," said Scott Croonquist, executive director of the Association of Metropolitan School Districts. "We need an inflationary increase in the formula and that's basically what was provided."

Croonquist said the focus on per-pupil spending was important because of districts' wide-ranging budget situations this year.

Many districts saw a sudden drop in enrollment during the 2020-21 school year as families concerned about pandemic safety or the irregularity of in-person instruction opted for private schools, home schooling or delaying the start of kindergarten.

Some lost funding usually designated to help struggling students because of a federal government shift in school meal programs. Meals last year were free to all students, so many families didn't fill out paperwork that would typically grant them free or reduced-price meals, and districts couldn't count them when they sought additional money.

Christine Tucci Osorio, superintendent of the North St. Paul-Maplewood-Oakdale school district, said her district took a $5 million hit in funding because of the lunch-paperwork problem. Plus, enrollment dropped by about 3%. With about $10,000 in state aid tied to each student, that added up to about $3 million in additional losses.

The district was able to patch some budget holes with the federal relief money that's come in several waves this year. And it dipped into its reserve fund to avoid layoffs, with the hope that more money would come from the state. Tucci Osorio said the district looks to have avoided a crisis for now, though plenty of unknowns remain.

"This year has just been uncharted waters," she said.

In districts with fewer low-income families, there are different calculations.

Wayzata, for example, didn't see as much of an impact in funding linked to school meals. But because the federal relief money was distributed based on a similar measure, the district didn't see the same kind of windfall as higher-poverty districts. Filling in the budget gaps from enrollment declines has been more complicated.

Kahring, the district's finance official, said Wayzata's enrollment last year fell about 500 students short of expectations, adding up to about $5 million in lost funding. The district froze hiring and managed to avoid layoffs but is still working out some budget details that couldn't be finalized until the Legislature finished its work.

St. Francis Area Schools shaved $4 million from its budget this spring, pulling about half of that amount from its reserve fund. Superintendent Beth Giese said the district won't reverse any of those cuts, but it will be able to replenish some of the reserve money.

Giese said she was pleased that lawmakers set aside money for other priorities, like public preschool programs and about $10 million meant to help districts fill in the growing gap between the cost of special education and the amount of money the state and federal governments chip in. But she said it was just a "starting point."

"We appreciate our legislators recognizing we are doing some great special education programming, but it needs to be funded if mandated," she said.

Meanwhile, some districts are still hedging their bets, wary after a year that came with an endless series of pivots forced by the pandemic.

In Grand Meadow, in southeast Minnesota, Superintendent Paul Besel said the district made good use of additional federal aid this year. But when another round of money came in, school leaders decided to "tap the brakes." Things seem on a good track to start the school year without much interruption, he said, but what if things change? What if the district suddenly has to find more masks, or plexiglass, or pivot back to distance learning?

"We're not going to spend any more of those dollars in the near future, because honestly we don't know what the summer is going to bring, or how the school year is going to start," he said.

Erin Golden • 612-673-4790