Monday, March 21, 2011

House Omnibus Ed Bill buys formula increase with Special Education Revenue Cuts

Here are some of the of the financial provisions of the House Omnibus Education Bill. Legislators like to increase the basic formula and pay for it by reducing funding for special education and other funds. Doing so makes it look like education is being held harmless or even provided more funding, even when the net result is negative. This is a long-standing device used often by both Republicans and Democrats alike. The key financial features:
  • Large cuts in special education revenue to pay for smaller total increases in regular education funding. Statewide, total cuts in special education funding to school districts of about $38 million. St. Cloud special education funding would be cut $73 for each student in the district (disabled or not). Across the state, cuts range from about $20 for each student in the district (whether disabled or not) --for districts with low special education student populations --to as high as $100 per student (disabled or not) --for districts with large special education populations. These revenue cuts are not accompanied by policy changes that allow spending reductions. Reductions must be made from regular education, out of the general funding formula, because cuts in special education are prohibited. For many districts, the result is to take away completely, the increase in the formula, and then some.
  • Major cuts in funding for Duluth, Minneapolis and St. Paul. Duluth is cut $132 per student, or about 1.1 million dollars, Minneapolis and St. Paul are cut about $14 million each.
  • Small basic revenue increases using some of the money "saved" by special education revenue cuts. The Bill would increase the basic formula allowance from $5,124 to $5,155 in fiscal year 2012, to $5,210 for fiscal year 2013, and $5,375 for fiscal years 2014 and later. Total cost to increase the basic formula is about $28 million in year 1. Thus, the entire cost of the general formula increase is paid for by special education cuts, with red ink to spare. Keep in mind that the cuts in special education are not accompanied by district expenditure cuts. State law still prohibits school districts from cutting their special education budgets, so the House Omnibus bill is a form of bait and switch. The losers are the districts with high special education populations and the highest special education deficits.
  • Some school districts large increases, some large decreases. The winners generally are the districts who serve the least special education students and the losers are the Twin Cities, Duluth, and districts with high special education populations.
  • St. Cloud total funding is cut $378,000. Elk River gets a $1.6 million increase; Lakeville $1.1 million increase.
  • Foley, Rocori, Sartell, get small net increases. Sauk Rapids gets a small net decrease.
  • Compensatory education revenue. The Bill would "delink: compensatory revenue from the basic formula allowance. The plan is to gradually phase out assistance to school districts with students with high needs so that over time, education money would move from districts with large high need student populations to those with smaller high need student populations.
Earmarks. Fifteen school districts, including Lakeville, Anoka, Rochester, and others get special earmarks of extra compensatory revenue ranging from one million to $4.2 million. Rationale is that these districts seem to have complained that the compensatory education formula doesn't work fairly for them. Special education formula doesn't work for us. Can we have an earmark too, please?

Jokes aside, one of the problems with using earmarks for selected school districts is that it can lead to allocating money based on political favoritism for particular legislators. Perhaps Anoka's legislator will trade some more money for the Anoka school district in return for a vote on gaming, or a football stadium. Under a formula system, at least legislators must provide funding based upon a transparent formula that is applied to all districts.

Integration Revenue. Big cuts in integration revenue for St. Paul, Minneapolis and Duluth. But school districts now free to use their integration revenue to improve learning, which is a good thing.

My prediction: Special education funding cuts and school district earmarks would render this legislation unconstitutional, if it were adopted.

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