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Minnesota Budget Project^*

E-12 Education

The future health of our state’s economy hinges on the success of our early childhood through 12th grade school system, also known as E-12 education. Yet Minnesota has work to do to ensure all that children have the opportunity to learn and succeed. There are large racial and income disparities in educational achievement. Low-income children are twice as likely to not be ready for kindergarten compared to children from families with the highest incomes. Business leaders recognize that closing this gap is not only the right thing to do, but the smart thing to do: the Itasca Project [link added], a group of about 40 Minnesota CEOs, asserts that reducing racial and income disparities is critical to preserving Minnesota’s strong economy and business competitiveness.⁵

Yet schools across the state are simply in survival mode after years of budget austerity and cuts to programs and staff. Inflation-adjusted school district revenues have declined since 2003, as state funding for E-12 education has not kept up with inflation.⁶ Meanwhile, dependence on local property taxes to fund education has increased substantially. Recently, the Rochester School Board closed their latest budget shortfall by eliminating 30 teaching positions and increasing class sizes from Kindergarten to grade 6.⁷ The Anoka-Hennepin school district, which has a $15.8 million budget deficit, eliminated 130 teacher jobs and will cut down on textbook purchases, bus services and other expenses.⁸

E-12 education is one of the few areas under the Governor’s budget to receive an increase in resources. The additional funding, however, is focused on rewarding schools which are succeeding in making progress, rather than attempting to address serious educational disparities.

Shift in education funding
could force schools to borrow

The most substantive recommendation from the Governor on E-12 education is to artificially lower the budget deficit for FY 2010-11 by delaying payment of $1.2 billion in state aid owed to school districts to the FY 2012-12 biennium. Policymakers agreed to a similar shift in state aid when Minnesota last faced significant budget deficits in 2003.

This could force some districts into drawing down their cash reserves or shortterm borrowing (made more expensive by tight credit markets, as the Governor’s budget points out). This measure is a short-term fix for the state’s budget woes, which simply delays the deficit problem to the next biennium.

Q-Comp program expansion

The Governor would expand the Q-Comp program to all school districts. The Q-Comp program is a 2005 initiative from the Governor that restructures teacher pay and professional development. Currently, less than a quarter of all school districts participate in Q-Comp. The Governor would require all school districts to participate. The expansion would cost the state more than $40 million in FY 2011 and $109 million in FY 2012-13. However, 35 percent of QComp funding would come from an “optional” local levy, where the school district would be authorized to increase local property taxes to pay for a portion of Q-comp.

Rewarding schools
that are succeeding

The Governor’s proposal includes an additional $91 million for schools that improve test scores as part of a new “pay for performance plan.” The program would reward charter schools and school districts that have increases in certain standardized test scores with more general education revenue.

While the Governor directs significant new resources to schools that are already having success, he directs very limited resources towards addressing the needs of struggling students. The Governor proposes $10 million for a new pilot program to set up an intensive summer school for 8th graders that are tested as not yet proficient in math or reading. This pilot program would reach 2,000 students in FY 2010 and 4,000 students in FY 2011 (there about 63,000 public school 8th graders in Minnesota).⁹

^*SOURCE: Extracted from the Minnesota Budget Project's February 26, 2009 report: Round One: Governor’s Initial Budget Proposal Focuses on Spending Cuts and One-time Measures. Read the full report for impacts to Health and Human Services, Higher Education and other state programs.

Notes

⁵ More information about the Itasca Project is available at www.theitascaproject.com.

⁶ Minnesota Budget Project, The Lost Decade, December 2008. School district revenues per pupil adjusted for inflation in FY 2008 dollars.

⁷ “School district finalizes $9.3 million in cuts to budget,” Rochester Post-Bulletin, February 10, 2009.

⁸ “Anoka-Hennepin Looks to Slash its Way out of $15.8 million deficit,” Star Tribune, February 10, 2009.

⁹ Minnesota Department of Education, Minnesota Education Statistics Summary 2007-2008.

¹⁰ Estimates from the Minnesota Housing Partnership.

¹¹ Testimony in Housing Finance and Policy and Public Health Finance Division, January 28, 2009.

¹² Minnesota Budget Project, The Lost Decade, December 2008. Adjusted for inflation in FY 2008 dollars.

¹³ “MnSCU choice: Cut staff, close schools, hike fees?,” St. Paul Pioneer Press, January 28, 2009.

¹⁴ “Showdown Could Leave our Courts in Chaos,” Star Tribune, February 21, 2009.

¹⁵ Mark Zandi, Washington Throws the Economy a Rope, January 22, 2008.

 Read the full report