Tuesday, November 9, 2010

Fix Education Finance Now!

Its time to think about where public education finance is going in Minnesota. This last year, Minnesota took another giant step forward into financial instability in public school districts across the state. I've discussed the factors in my blog posts in the past, but the November elections put an exclamation on the continuing march towards financial collapse. The cycle of unsustainability continues to include:
  • Nearly one half billion dollars of special education funding shortfalls. The State keeps ratcheting up the cost of mandated special education expenditures, while growing the gap between those expenditures and state funding.
  • The freezing of state funding for regular education.
  • Funding shifts that impose significant delays on the receipt of state revenues by local districts, forcing school districts to borrow to meet payroll.
  • Spurred by the bargaining penalty and other significant financial pressures, compensation increases granted to licensed professional staffs which regularly exceed the rate of growth in state funding, and the State's failure to develop a policy that assures a bargaining structure that assures balance fair pay increases for licensed staff within state funding constraints
  • The failure in many districts to maintain or pass levies undertaken to make up shortfalls.
Let me mention several school districts as an example of this instability. For the seventh time in five years, Brooklyn Center School Districts asked voters to increase property taxes to pay for education. Brooklyn Center's last teacher settlement is reported by MSBA to provide a two year total package increase of 7 percent (and the MSBA reports understate the actual percentage cost). Brooklyn Center is increasing its compensation cost by 7 percent at the same time it is receiving no funding increase from the State of Minnesota.

Today's Tribune contains a timely article on this subject: Strapped School Districts start planning...." (Click on the link to view). It tells us that school districts all over the state are planning levy campaigns for November of next year, to make up the shortfall in what is expected to be a gruesome state budget. But before we get to that point, we need a sustainability plan at the state level.

Rochester placed two questions on the ballot this year. The first would have increased the current $450 levy by about $700 per student. The second would have added $120 per student, for a total increase of $820 per student. On January 5, 2010, Rochester avoided the state bargaining penalty, and increased teacher compensation by an MSBA reported 5+ percent over two years. On November 2, both Rochester's levies failed by significant margins. According to their Superintendent, Rochester now faces significant cuts in the next year. The District says that it is faced with a $5 million budget gap, some of which will be filled by remaining stimulus dollars, on a one time only basis. "We're going to have to start looking at some real cuts," said newly-elected school board member Julie Workman. "Class sizes will continue to increase, the programs will disappear, the options for students will dissipate," said the District's Dr. Hawkins.

Elk River School District settled its teacher contracts at an MSBA reported 4.2+% for the biennium on January 10, 2010. Its request to voters to renew--that is continue the existing operating referendum--passed by 59 votes, but a request to increase that levy further was resoundingly defeated. Its superintendent told the media that they could keep classrooms protected for this year, using stimulus money, but that if there were cuts at the State level, all bets were off.

The MSBA's 2010 referendum results show 43 districts out of 77 passed at least one operating levy question, but many of these districts merely renewed existing levies. Thirty four of the districts which tried failed to pass any operating levy question. Of the 43 that passed, 30 districts passed all questions and 13 had mixed results. The 77 districts asking for a levy was the highest number since 2007, when 101 districts requested levy referenda. The State of Minnesota continues to exhibit a patchwork of levy support, with some districts sporting levies of $1000 per student or more, and some districts with none. Nor is the levy support allocated according to need. Districts with significant special education deficits may have much lower levy support than districts with small special education deficits.

For those of you who think you have a simple solution, you are deceiving yourself. If it were that simple, well, we'd have it already. Financial stability in Minnesota requires courageous action at the State level, as well as the local level, and that means that Republicans and Democrats are going to have to put kids first this year. By putting kids first, I mean putting kids before everything else: before all organized lobbying and interest groups. Before labor. Before the anti Tax lobby. Before politics. The solution is going to require compromise, but the outcome should result in structural stability and parity between revenue and expenses.

In the meantime, public education needs to take a pause in compensation increases, until the legislature fixes the financial mess. A pay freeze begins by setting an example at the executive level, which means that district executives across the state should be showing leadership by freezing their pay and benefits for next year. Many districts have outstanding dedicated executives. Most earn their pay. But sacrifice begins at the top. Last year, our Board of Education cut its compensation by 10 percent. We did that not because the cut was a huge sacrifice. It was not. But we wanted to send a message that public education is hurting, and we simply cannot afford to increase compensation, when our revenues are frozen or declining. Social security has been frozen two years in a row. The public is not going to understand continuation of the cycle of increases not paid for.

At the State level, the governor and legislature need to provide us with a framework that leads to fiscal stability at the local level. It's time to stop penalizing school districts when they cannot settle their contracts sustainably. School Districts are beginning to witness voter backlash. Historically, voters want school board members who believe in public education, who value education professionals--who bleed education. But voters also cannot understand why we are running a system where in many districts compensation costs go up at a rate vastly greater than revenues. They are getting tired of the constant cycle of crisis and cuts. Eventually, if board members who deeply care about public education cannot find a way to maintain stability, candidates with fundamentally different agendas are going to step forward.

Along with temporary measures in public education, the State of Minnesota is going to have to recognize that it cannot continue to increase the health budget at the rate of 8.5 percent per year, year after year. Hospitals, doctors, nurses, nursing homes, counseling centers, and the entire health lobby are going to have to wake up and realize that there is no future for a state that insists on growing health care expenses at this unsustainable rate. When they advocate for an ever-increasing share of the State budget, they are destroying the State's ability to fund education as a consequence, and that is not good for public health in the long run. The State has frozen regular eduction expenditures per student for several years now. That cannot continue. But the 10,000 pound gorilla at the legislature is not K-12 education, it is health care and related expenses. So its time for the legislators who have strong health care constituencies to learn to say, no, we have to get sustainable. That's going to require a new attitude at the legislature. Legislators must learn to say no not just to the very poor, which is politically easy: they are going to have to learn to say no to the powerful health care lobbies who represent the big dollar industry.

The Minnesota K-12 education finance system is broken. As long as it is broken, it is going to be harder to find support for needed revenues. It is broken because its based upon the habitual practice of forcing up special education costs without corresponding increases in revenues. Its broken because its based on the assumptions that we can pay our employees more, without corresponding increases in revenues. Its broken because the State refuses to recognize that some revenue increases are necessary to fund deserved increases for education professionals and other staff. Its broken because we keep going to the property tax well over and over again, to make up the difference, and doing that is impossible in most school districts. Its broken because republican legislators and the Governor believe that it is acceptable to starve public education of revenues, while both democrats and republicans support growing the health care portion of our budget beyond sustainable levels.

We need a new comprehensive K-12 financial system, brokered at the State level, that begins with the concept that you don't increase expenses of anything, without increasing revenues. Along with that, when the economy recovers, even conservatives have to recognize that you can't have a great public education by freezing funding year after year.

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