St. Paul Illustrates Budget Challenges in an Underfunded System

We've been advocating that to fix its broken funding system so that Minnesota public education works for the children that Minnesota has been leaving behind, that Minnesota needs faithfully to implement the Skeen/Cruz Guzman constitutional mandate--that is, to provide districts enough funding to provide all students with an education that meets state standards.  The St. Paul District's budget challenges illustrate the difficulties encountered by urban districts when they strive to address the needs of students with higher and costlier educational needs.  This year's budget shows that, despite good intentions, metropolitan school districts like St. Paul operate within a state created financial straight jacket that makes it virtually impossible to implement systemic changes that can make our public schools work for the students we now leave behind.  St. Paul just passed a $17 million referendum, among other things to attack the achievement gap.  But this year's budget demonstrates how pathetically small that referendum is, compared to what must be done.

Until the state, led by the Governor, Commissioner and legislature makes fundamental changes, St. Paul will not make needed transformations.  This year's budget appears to be designed to prevent a catastrophic teacher's strike and to prevent a major fiscal catastrophe.   There is nothing in the budget that is up to the transformation that will be required to deliver an education that meets state standards for its students.
Let's look at how Minnesota's fiscal straitjacket hamstrings St. Paul.  It should be obvious that St. Paul is faced with the need to make major strategic changes if it hopes to meet the needs of the students who are costlier to educate.  Its free and reduced lunch eligible enrollment is a whopping 66%, its English language learner enrollment is a state-high 30%, and its nonwhite enrollment 79%.   It is losing enrollment to charter schools, and its budgetary increases are wiped out by compensation increases and enrollment declines. St. Paul's reading and math proficiency rates for non ELL students of color are persistently low.  Big changes are surely necessary. 

The District's next year total operating budget will be $579 million.  Last year, the district's budget amounted to about $15,500 per "adjusted daily membership."  As of last year, the district was saddled with a special education deficit of $40 million, or $1000 plus per student.  AMSD figures tell us that the District's English Language deficit has been running at $19 million.  Both these are mandate deficits, totalling $60 million, or about $1300 plus per student (that is the SPED and ELL mandate deficit divided across all students) 

Faced with severe financial pressure, and the need to implement major reforms to attack the achievement gap, the district went to the voters to obtain an operating referendum levy increase of $17.3 million. That's about $500 per student.   The District's operating referendum increase is less than 1/3 of the combined special education and ELL deficit.   At the time of the referendum, the district hoped to use the new revenue to implement major initiatives to address the students it has been leaving behind.

St. Paul FY 20 General fund revenue experienced a $17.8 million increase . That increase arises from a netting of increases and decreases.    Its general education revenue increased by 2% ($5.2 million), pre-kindergarten revenues by $2.2 million and special education revenue by $2.2 million.  In addition, the district received a $17.3 million revenue influx as a result of increases in the operating referendum approved by voters.  All of those increases, however, were diminished by decreases resulting from enrollment declines so that the net increase in general fund revenue was just a half million more than the referendum increase.  

In order to meet contractual obligations, mostly compensation increases, the district will have to allocate over $10 million of the $17 million referendum increase to keep doing mostly what it is now doing but at a higher price, leaving about $6 million to fund strategic initiatives -- about $150 per student.  The superintendent's proposal for spending this $6 million involves the very kind of things that a district needs to do, but its a 1 percent increase in a district that needs ten times or more than that, and a big bold plan to use that money for transformation. 

Don't blame the superintendent; don't blame the board of education; don't blame the teachers or their union.   They are working in a system designed to yield systemic failure.  

This year's small budgetary increase for strategic initiatives becomes the base budget for the following year.  In that following year, our system demands that this year's compensation becomes the base against which another round of compensation increases are required.  Decreasing enrollment will take its toll, unless and until the public sees major improvements, and one percent isn't going to the job, although Jvonkorff on Education hopes that it is wrong. 

The fault for all of this results from a failure of leadership in the Governor's office -- Pawlenty, Dayton and now Walz, in the Commissioner's office -- now occupied by a person who knows St. Paul and should know that 1 percent won't do the job, and in the legislature.   In our next post, we'll describe a big bold solution to this problem, one that will take courage in those quarters, or a kick in the behind from the judiciary.