Saturday, July 16, 2011

How much money is enough, Mr. Von Korff

During the shutdown, I wrote furiously to legislators and the Governor, urging them them to provide more revenues to education.    I appreciate the careful consideration given to these letters and emails by many, of course.  But near the end, one of the key legislators in the education fray wrote, as if frustrated with my pleas, "Mr. Von Korff, how much of an increase would be enough."   It felt as though I was being told, no matter how much we send you, it's never enough?  

My answer is more complicated than the legislators want to hear.     My answer is that the amount of money we need depends a lot on the legislators themselves.  One of the great problems in St. Paul and Washington, D.C. is that legislators don't seem to make a connection between the policy bills and mandates  they pass and the answer to the question "how much is enough."   Over the last ten years, the governor's office and the legislature has piled on new responsibilities and mandates for local school districts.   And, the State has created a costly structure of labor policies, benefits, licensing, and prohibitions that together speak loudly:  "let's make public education more expensive in Minnesota."   Many of these policies have good reasons behind them, but St. Paul doesn't have enough discipline and policy coherence to cost out these policies and connect them to revenues.

In the last decade, total special education costs in the State of Minnesota has skyrocketed.    These costs are driven by intentional, and well-meaning,  policies in the executive and legislative branch designed to provide more and more services, and more costly services, in special education.    But never do these policies come with money needed to pay for the new policies attached to them.   Nobody estimates the implementation costs, let alone, passes funding legislation.   The result has been that the annual deficit in special education in Minnesota, the difference between total spending and total revenues for special education, has risen from about $350 million per year to about $740 million projected for 2013.
 
This year, the Republicans tried to dial back the amount of revenues provided to special education, but they refused to advance legislation that would help local districts reduces special education costs.   And so I say to the esteemed legislative leadership:   "The answer to your question, how much is enough, is partly in your hands.  In St. Cloud, we are doing everything we can -- everything the law allows -- to keep our costs down, and the deficit in special education funding  has risen from $5 million to about $9 million."  We'd like the State to wipe out our special education deficit.   We need legislative authority to control costs.   And, we need the legislature to fund what it forces us to spend.
This year, advocates for school districts urged the legislature to repeal the bargaining penalty, which penalizes districts and taxpayers if their school board refuses to increase labor costs faster than state revenues rise.     If the bargaining penalty repeal is one of those policy items that Dayton forces the legislature to remove from the education bill, that will substantially increase the cost of public education next year, because many school boards simply will not risk paying that penalty, even if they have to pay out higher labor costs many times greater than the penalty itself. If the legislature wants to penalize local districts that refuse to increase compensation more than they can afford, then it ought to have the courage to pay the cost of that policy.   

Last year, the legislature raised the assessments against school districts for state employee retirement benefits, an assessment that will increase our costs by $1 million over the next four years here in St. Cloud.  But not a dime of revenues was provided to cover these increases.  

These are three examples of the connection between what folks in St. Paul do on the policy side and the cost of education.   One of the remarkable facts of state governance is that our state legislature writes policy bills and school financing bills virtually without making any serious effort to hold hearings on the answer to the question that the legislator asked me:  "how much should it cost to deliver the education we need in Minnesota."    Some time look at the hearing schedule of the education committees.  You will see precious little on the hearing schedule seeking to answer this fundamental question.

This year, the Governor convened a committee to discuss education finance reform.   But the committee didn't study what public education should cost, it studied possible changes in who gets the money we already have.   The question of what it costs to do what the legislature requires was basically removed from the table.   Nobody wants to know the answer any more, because frankly, they already know that the answer they get won't be popular.  The State of Minnesota is forcing school districts to spend 1.5 billion per biennium more in special education alone than total federal and state revenues combined.    If we tried to solve this problem by reducing the mandate, a long line of advocates for the disabled would, understandably, descend on the State Capitol and demand protection of these important initiatives.  If we tried to solve this problem by increasing revenues, a group of legislators would say that they promised the tea party crowd that they won't raise taxes.   Its easy to keep the no new taxes pledge if you wash your hands of the real problem: providing revenues to fund the good things that you want to take credit for.

Minnesota's school finance "system" is no longer a system. It consists of a set of mandates and policy prohibitions completely disconnected from costs and revenues.   It is symptomatic of this total disconnect between the cost of programs and the revenues that we collect, that school districts have now become the official banker for the State of Minnesota, essentially lending the State billions of dollars to do what the Constitution was designed to prohibit:  to spend more than we collect in revenues.

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