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The Check (will be) in the Mail

The good news is that the State of Minnesota has a budget for the current biennium, ending in July of 2011.  The bad news is that the State of Minnesota has a budget for the biennium – but not one second beyond.  A lot has been written about this budget for the news, much of it about as imprecise as we can expect in the flurry of nooze that accompanies the end of a session (and the encore “special” session, make of the quotes what you want).  Yet in all that has been written little attention has been paid to what it means, especially to the recipient of the largest hit, education.

I’m going to do my best to summarize.  Please, if I get anything wrong, wail on me.

Good information about how we distribute money to K-12 schools is very hard to come by.  Most of the reason for this is that the funding system is very complex and constantly changing.  I will rely heavily on one report by the State House, “Financing Education in Minnesota 2009-2010” (pdf) which is updated annually.  This monster report is a must-read for anyone who wants to understand how we fund education in the state – but have a cup pot of coffee handy because, at 65 dense pages, it’s a helluva slog.

The way Minnesota allocates money to school districts across the state is based on a formula.  This starts with the Basic Formula allowance of $5,124 per pupil unit.  Simple enough, except a “pupil unit” is determined as follows:

One Kindergarten Pupil   =  .612 pupil units
One Elementary Pupil (grade 1-3)  =  1.115 pupil units
One Elementary Pupil (grade 4-6)  =  1.06 pupil units
One Secondary Pupil (grade 7-12)  =  1.3 pupil units

If that seems a bit complicated, please understand that we’re only getting started.  There are formulas for aid based on categories that include poverty (free and reduced lunch qualification), gifted or talented, English as a second language, sparcity (ie, excessive rural transportation costs) and a few others.  There is also an offset for the state to pick up a share of any local property tax “excess levy” passed by the voters in a district which comes out of property tax.

That’s why this report becomes so complicated – and why the details cannot be covered in a newspaper or other medium easily.  I will go to the bottom lines at the end of the report and deal with the net average gross effects with the understanding that this varies from one district to the other.

On page 61 of pdf, we can see that the bottom line for K-12 education in Minnesota is $6.9 billion per year from the State of Minnesota.  Compared to the deal reached recently, we can see that in order to balance our budget for this current period a total of $2.0 billion will be delayed until 1 July 2012, or about 29%.  Districts will get this money after the school year is over, in the summer.  The rest will be paid out, as usual, during the course of the year.

School districts average 74% of their revenue from this pot, according to page 65. That means that the total amount spent on K-12 education is $9.3 billion, or that the offset will on average mean that the delayed payments to school districts is about 21% of their total budget on average.

Nearly all districts in the state have some “excess levy” that comes out of property taxes, but it varies dramatically.  The net effect on any given district is going to be different, but generally will fall between 21% and 29% of their total budget delayed until the end of the year in order to balance their own budget.  They will cover this by cutting programs or borrowing the money at costs that will also vary.

One class of schools we can be sure will take the larger hit are Charter Schools.  Each one is its own district for accounting purposes, meaning that they will see their payments delayed the full 29%. They also have very limited borrowing ability, so the delayed payments will have to be worked out by other means, generally by delaying their rent payments and as much other costs as they can.  29% is a very large hit, and seems to suggest that some charter schools will not be able to make it.  It seems reasonable that a wave of charter school closures is in the works, but we cannot be sure how large this effect will be until the funding cuts are put to pencil and paper later this summer.  The disruption to the lives of students and parents in charter schools may be extreme.

This is what the Minnesota State Budget deal means to our schools, as far as we can tell today.  How this will play out remains to be seen as tough decisions are made in districts, including charter schools, across the state.

Comments on any mistakes I have made in this summary are very welcome, as are comments on how any one district is handling the delayed payments.  I hope that collaboratively we can get a sense of how this will play out across the state.  Thank you.

16 thoughts on “The Check (will be) in the Mail

  1. I know this is complicated but with all the numbers thrown around, you’d think that we could at least get the 21-29% figure in the news reports. Thanks for doing what the media could not.

  2. I know they get the money eventually, but I can’t imagine how school districts are going to manage this much money being delayed. It’s a huge part of their budget no matter how you look at it.

    No one talks about this as a cut, but that’s what it is. More gimmicks and bulls**t from the politicians is what we have here.

    It makes me sick. Wait until the next session to see how they deal with the money they are supposed to pay in July – bet it gets delayed again. Yeah, the check is in the mail and I won’t say what else.

  3. I decided to present this as blankly as I could without comment, but I agree that this is bullshit and needs to be thought of as a cut to K-12 overall. The fact that charter schools in particular are getting such a big part of the hit should register among their backers, which includes most Republicans, but hasn’t so far. Their silence on this aspect of the deal is clearly politics at its worst – all talk and no action.

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  5. Really good coverage of an especially sticky issue. I think you’ve boiled down this complex picture very nicely and it comes down to the fact that the Guv and the legislature are unfortunately asking schools to bear the brunt of their lack of courage.

    I’m really upset that not more people are making this an issue, and I hope MAK starts really wailing on what a bad decision it is to balance the budget on the backs of the children of MN, not that Republicans have ever had a problem with that.

  6. Really enjoyed seeing the formula. Two questions (and quick comments will do). How does the funding work for all day kndergarten? Why is the cost higher for 7-12?

  7. Dan, I can’t answer too many questions on the specifics of the formula and why they are the way they are. I understood that they are based on real costs, but I don’t think they’ve been significantly adjusted in a while – it would be a major political football if they were.

    I’ll tell you what – I’ll try to see what that report and all the older ones at the House say. Just change the year on the report’s name and you can get the old ones. 🙂

  8. I don’t think they will ever give that money to schools in the end. The way they keep rolling this along, I hear the projected problem next year will be 6 billion or more. I’ll bet you just about anything that this 2 billion will become permanent then — especially if noone complains about the delay.

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