Budget deal doesn't leave room for hoped-for school spending hike
ST. PAUL—The tentative budget deal struck on Sunday among Minnesota lawmakers doesn't leave room for a hoped-for funding increase for K-12 public education.
DFL Gov. Tim Walz has pushed for a 3 percent hike to the state's per-pupil funding formula next year—a move at least partly designed to catch up with inflation after years of stagnant funding levels in the 2000s—and a 2 percent hike the year after that. But the budget agreement he and Senate Republicans hammered out over the weekend only leaves enough fiscal room for a pair of 2 percent increases.
The smaller funding increase means the gap in Bemidji Area Schools' general fund will remain relatively wide. In April, district leaders approved a series of cuts to licensed staff that would save about $670,000, and administrators plan to figure out further reductions among non-licensed staff and other expenses to close the remainder of a $1.3 million projected deficit for the upcoming fiscal year.
That projection assumes a 2 percent funding increase next year on the $48.2 million the district receives from the state formula, a figure that accounts for about three-quarters of its revenue. A 2 percent increase on that revenue would yield an additional $964,000, and a 3 percent one would yield an additional $1.4 million—a difference of about $482,000. That means the district's remaining deficit would have presumably shrunk under Walz's proposal by about that much.
"We would have still been, as always, looking for ways to be as efficient as possible, but I don't think it would have been quite as pressing," Superintendent Tim Lutz told the Pioneer when asked what the district would have done with a 3 percent increase. He said the school district could spend about $700,000 from its cash reserves to balance its budget next year, but that figure could change as more financial variables crystallize.
"'Two and two"s have been the norm for the past few years in Minnesota, and, assuming the newest set of them makes it into law, it would more or less keep up with inflation, which is projected to be 2.2 percent next year and 2.0 percent the year after that, according to a February economic forecast from the state's management and budget office. Lutz said district staff predict their costs will climb 1-2 percent as administrators there prepare for another round of negotiations with employee unions.
But Bemidji Area Schools' financials are still far from cut and dried—that $1.3 million projected deficit assumes enrollment won't go up or down, and that's a shaky proposition because a new charter school plans to open south of town, which could mean an enrollment drop of a few dozen students and the state revenue they bring in. District staff estimated they could lose up to $600,000 worth of per-student revenue to the charter.
And state spending plans for special education and transportation are still up in the air as House and Senate leaders reconcile competing K-12 budgets and policy ideas. School districts like Bemidji's often spend from their general funds to make up for the gap between what they spend on special ed and transportation and what they receive from the state and federal governments for those purposes.
The upcoming fiscal year begins July 1.