How Much Expanded Education Will Minnesota Districts Fund under the 2024-2025 Education Budget (1)

The media  has left us all with the impression that the Minnesota legislature showered new funding on Minnesota school districts--at times the new funding has even been described as transformational: "the Education funding we've all been waiting for."   So what transformations can you expect from your local school district?  How do we measure how much it really received; what it could be used for; and what should advocates for educational transformation expect from the new district budgets to fund priorities.  In this post, we'll describe different windows on how practically to measure the magnitude of these increases and hopefully decipher the hype that accompanies the biennial education budget, using my own St. Cloud School District as an example.   The leadership of the St. Cloud District is genuinely committed to using new money to benefit the students who need improved educational services the most.   What has the legislature given them to work with and what can they do?

So let's take a critical look at how to measure what a school district received, and then in that context, examine what discretion district leadership has to make a difference for students. It will take us a couple of posts to do that.  

The Post-Legislative Budget Cycle.  

School Districts need to pass their budgets before the beginning of the fiscal year, and that usually means by the end of June.  A tremendous amount of work goes into that budgeting process.  In St. Cloud, collective bargaining contracts coincide with the two year budget calendar, and serious bargaining is difficult until the legislative budget is in stone. Except for targeted funding, almost all revenue is "on the table," for bargaining, and so, the budget passed by June is filled with imponderables.  In St. Cloud the June 2023 budget used last year's base funding.  It didn't include the new money that was expected to come in the budget, and it didn't budget for the increased compensation that would result from collective bargaining.  While the administration aspired to use some of the new money to provide expanded services, appropriating that new money for expanded services would have been criticized by bargaining partners as unfairly taking money "off the table," and this is likely true for many other districts.  

As the legislative budget was passing, Education Minnesota was urging its member groups to push for proportionately fair packages  and urging them not to harm other districts by settling for too little.  Like similar districts, the St. Cloud District needs to expand services for lower income students, for English language learners, for students with dyslexia, students for color, and for other pressing needs.  In a perfect world, those expansions, would be part of the budget passed in June,  but Minnesota's funding cycle makes that almost impossible. 

Assessing the Magnitude of What has Been Received in Context

How should we measure District funding increases?  Unfortunately, there are multiple ways to measure what the legislature has provided your school district.  The official reporting for the St. Cloud District's General Fund Revenue, the state funding that delivers most educational services, shows the St. Cloud District as receiving   $136 million in FY 2021 "increasing" to $161 million in FY 2025, the second year of the new legislative budget.  So "wow" that's an 18% increase over 4 years time measured that way.  But that's only window on the funding.   Here are some differing approaches to looking at education revenues in context:

• Total state unadjusted increase 2021 versus 2024 and 2025.  This approach has no adjustment for inflation and no adjustment for changes resulting from enrollment.   MDE legislative funding reports show St. Cloud District receiving $137 million general fund dollars in FY 2021 and $161 million projected for FY 2025.   A legislator might then say, “we gave you $24 million, an increase of $6 million per year.  What did you do with all that money?  ($24 million)

• CPI (or IPD) adjusted increase per ADM, 2021 versus 2025.   MDE’s spreadsheet for the St. Cloud District shows no increase in the inflation adjusted general fund revenue from FY 2021 to projected FY 2025.  Adjusted for the consumer price index the 2025 revenues for the district did not increase at all.   (No increase)
  

• Old Law versus New Law Revenue for FY 2024 and 2025.  This measure compares how much state revenue the district would have received if the operative formulas in law remained unchanged by the new legislation versus the amount that the district will receive under the newly passed formulas.  MDE reports that the new law revenues for district 742 in 2025 will be $13 million greater than its old law revenues.   This $13 million largely derives from the special education cross subsidy relief, formula increases, basic skills revenue (ELL and Compensatory) adjusted by reduction in enrollment.   This is the new money that the district receives beyond what it would expect to receive if the legislature kept formulas constant.  
  
  
• Basic Skills: Compensatory and ELL Funding Increases.   From FY 2021 to FY  2025, the St. Cloud Districts basic skills revenues, increases intended for English Language Learners (increasing from $2 million to $3.4 million) and for lower income learners (from $13.6 million to $20 million) a total increase -- not inflation adjusted -- of about $8 million   This increase may reflect an increase in the percentage of eligible students, or legislative intent that districts should use this funding to expand and improve education for the students covered by the two formulas. About $6.4 million of the increase is slated to occur in 2024--2025.  What will this money be spent for? How are other districts like St. Cloud assuring that the new basic skills revenue actually provides improved services for students of color, lower income students and English language learners.  If new money was not in your districts' June budget, what is the public process involving stakeholders in your district to allocate these funds? How will the district determine how fairly to allocate increases between expansion of services and compensation and other cost increases of current services?
  
  
• In 2023, the St. Cloud District ran a deficit in its ELL program budget of $3.4 million.  Other districts with similar ELL enrollment concentrations have similar or even larger deficits.  If the District were to use the EL and basic skills increased revenues to cover some of that deficit, a form of supplanting, that money would not increase services to EL students at all. How much of the increased basic skills revenue will be used to increase learning time for those students, to add more teachers, counselors or ELL specialists. How much of the revenues will be used to increase compensation for existing staff, and how much will remain to expand services?  All of this is a challenge for the St. Cloud District, and it will be as well for other districts in Minnesota, and these decisions as they are made across the state will determine the impact that the 2024-2025 budget has on the students Minnesota's education system leaves behind. 
  

• Loss of Temporary Federal Revenue.  The district predicts a drop in federal revenue in 2023-2024 of $14 million dollars from termination of temporary federal funding. It appears that  federal revenue may drop another $11 million in the following year, or a total decrease in federal revenue of $25 million.  The budgeting for permanent improvements will be colored by loss of this funding.
  

 Districts across the state are grappling with these issues.  How will they maintain federally funded programs that have turned out well?   How will they explain the budget challenges in this biennium while political leaders are asserting that the legislature provided districts with transformational funding?    How will they make these decisions transparently and in the public interest?