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Minnesota education spending: A tale of two budget bills

Lawmakers dealt with education funding in two different ways. The higher-ed bill was the only finance bill to finish before the regular session ended. 

Sen. Carla Nelson and Rep. Jim Davnie
State Sen. Carla Nelson and state Rep. Jim Davnie, chairs of the education conference committee, talking after recessing the committee so the House could consider a Senate budget offer.
MinnPost photo by Taryn Phaneuf

By the time the education conference committee chairs took their turn briefing the governor and leaders of the House and Senate on their budget bill progress, Rep. Jim Davnie was eager for them to step in.

“This has been a very slow process, particularly today,” he said Monday night with roughly five hours to go before the regular session adjourned. “We need to pick up the pace. The House is willing to pick up the pace. We just are waiting for direction from the leadership.”

Davnie, Sen. Carla Nelson, and their respective conferees were locked in a long back-and-forth over how to spend the remaining $148 million of the $540 million target they got Sunday from Gov. Tim Walz, Senate Majority Leader Paul Gazelka, and House Speaker Melissa Hortman. Less than 24 hours went by before that trio took over the education spending bill.

Around the same time, legislators cutting deals on higher-education spending broke their cone of silence with an alert that they would meet shortly to pass their bill – the only budget bill that would be sent to the governor’s desk during the regular session.

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Between the education plans, lawmakers showed their willingness to take at least two paths: Leave negotiations up to committee chairs or break stalemates with executive decisions. Both paths test deadlines and vows of transparency. Apparently, both also lead to a budget.

The wait

A dozen or so lobbyists representing administrators, school districts, teachers, and families spent Monday camped out in a basement conference room in the State Office Building, waiting to hear news of the education bill. Negotiations started with a brief meeting at 8 a.m., when House members made the first offer.

It included annual 2 percent general spending increases and permanent funding for tribal contract schools – two provisions secured by the global agreement announced a day earlier. The rest of the offer looked like a pared-down version of the original House bill, this time with a total of $540 million instead of $900 million. It included all the House’s policy provisions, which cover a range of topics and were opposed by Republicans, who refused to debate even those policies that didn’t have money attached until after the target was delivered.

As committee members returned at 2:30 in the afternoon, and again at 4:30, advocates, whose numbers had swelled, lined up by a table near the door to snatch the too-few copies of spreadsheets outlining the latest offer.

Those with school budgets on their minds felt most concerned about what would happen with special education and preschool funding. Schools must finalize their own spending and revenue plans by June 30. They would have to decide whether to keep their preschool programs running without confirmed state aid. Several advocates speculated the 2 percent increases in general aid won’t be enough, especially if the budget didn’t prevent the special-education cross subsidy from growing. They expect to see school levies on ballots in November.

The committee recessed for the last time with 10 minutes to go before the 5 p.m. deadline. The Senate chair said they would consider the House’s second offer, but neither side had appeared to budge on their most contentious points.

Nelson didn’t want any discussion of policy until the numbers were decided, yet the House walked through a list of 26 policies it still wanted in the bill. It included provisions on increasing teachers of color, health and safety, teacher licensure, and student discipline, among others.

They had made no progress on familiar sticking points like early learning, special education, and safe schools. Nelson had brought an offer to earmark $50 million for preschool without specifying how it would be spent – on scholarships or school-based programs. She proposed they continue that debate after they settle the rest of the spending plan but before they pass the bill.

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“Where do you expect to find time to do that?” Davnie asked.

Silence, then a higher-ed budget bill

The higher-ed bill, SF 2415, came together in two long negotiating sessions with a couple of elected officials and a Cabinet member. Sen. Paul Anderson, Rep. Connie Bernardy, Commissioner Dennis Olson, and their staffs, worked through the night Sunday and again through the afternoon Monday.

They didn’t bring offers to public conference committee meetings, release spreadsheets detailing their back-and-forth negotiations, or respond to media inquiries as the Legislature crashed toward its self-imposed deadline to pass bills out of committee by 5 p.m..

But theirs was the only finance bill to finish before the regular session ended.

“Nothing that was discussed wasn’t fully vetted in front of the conference committee,” Anderson said in the moments between passing the bill out of committee and taking it up on the Senate floor. “How you get it to that final agreement was done between the three of us and a lot of staff. But, again, a lot of that was also with input of conferees throughout the night, too.”

The tight turnaround between receiving the budget target and passing a finished bill made it necessary to hash out the details out of sight, as they did. This is what happens “when you’re told to put a bill together in less than 24 hours,” Anderson said.

“We needed to get the bill done today, so when we got our targets, we had to move quickly,” Bernardy said. “If we wouldn’t have started when we got our targets, it wouldn’t have gotten done by today. … We can’t control when we get it, but we had been transparent all the way through our conference committees.”

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$150 million split three ways

For this committee, the public process ended almost a week before the bill came together. They met five times between May 7 and 13, then recessed till May 20 at 8 p.m, when they convened to vote on a $3.4 billion spending bill, including $150 million in new funding split between the Office of Higher Education, University of Minnesota, and Minnesota State Colleges and Universities. It was a 53-page bill that solicited no questions or discussion before being unanimously approved by House and Senate conferees.

It was promptly delivered to the Senate, where members took turns with a few comments. DFL Sens. Ron Latz and Sandra Pappas criticized a lack of support for the state’s research university. A number of questions demonstrated how quickly everything happened. Members hadn’t read the bill and wanted to know what parts of the original Senate version were deleted or retained.

The university got just $43.5 million of an $87 million request, which the state hopes it will use to buy down a tuition increase for the next two years. House DFL had hoped to freeze tuition, but it would have cost $114 million. The bill specifically asks university administrators to cap any increase at 3 percent.

That same cap rose to the level of a mandate for Minnesota State, which received $64.5 million in new funding for campus investments. The House wanted to spend $159 million, also calling for a tuition freeze, but gave that up when the target came in lower.

State Sen. Paul Anderson
MinnPost photo by Taryn Phaneuf
State Sen. Paul Anderson signing the committee reporting on the higher-education budget bill so it can be sent to a vote on the Senate floor.
New spending for Minnesota State totals $81.5 million for the next two years, including $8 million toward a new student data system. It also allocates $7 million for Workforce Development Scholarships and $1 million for a textbook-free associate’s degree program, $500,000 for skilled workforce partnerships, and $250,000 for mental health services.

Republicans wanted to force Minnesota State to bring tuition rates for online classes in line with those charged students who take in-person classes. Online courses at Minnesota State cost more. The change would have cut the system’s revenue, and was fiercely opposed. Anderson said his caucus settled for freezing online course tuition and demanding a report that would call on Minnesota State to justify the discrepancy between online and in-person course costs.

The state higher education office got $25 million more toward its budget this year, including $18 million for the state grant program that helps low-income students go to college, whether they want to go to a public or private school.

In statements to the press, University of Minnesota President Eric Kaler and Minnesota State Chancellor Devinder Malholtra thanked lawmakers for their support.

“Although this investment by the state was short of our request, we are grateful for the amount provided and we look forward to working with the Legislature and governor to grow Minnesota’s economy,” Kaler said. “This support will help make the university an excellent and accessible institution for all Minnesotans.”

‘At the table inside’

Nelson left the meeting with Walz, Gazelka, and Hortman with a smile on her face and no intention of going back to a negotiating table before the regular session lapsed.

“I believe right now this is something that will be decided at the table inside,” she said, referring to the Cabinet meeting room she had just exited. “In a sense, it’s too bad because our conference committee has been very open, everything has been decided in the public, and that’s important. … And we’re not exactly sure how all these things will happen now.”

Later that night or early Tuesday morning, the leaders initialed a new agreement on the education bill spending $543 million. It preserves the preschool seats and freezes the special education cross subsidy, as Walz and House DFL wanted. It also sets aside $30 million in one-time funding for safe schools grants, as long as the 2019 closing balance exceeds the February forecast.

Teddy Tschann, a spokesman for Walz, said Tuesday he thought education would be a unique situation. But more deals signed by leaders were released Wednesday on taxes, environment, and public safety, showing they were willing to decide the fate of those budgets, as well.

The deal funds Minnesota Department of Education operating and legal costs and cancels a legal appropriation of $2.5 million from this fiscal year. Lastly, it gives the House and Senate each $1.5 million without specifying how they should spend it.

The leaders also agreed to ditch any policy that had not already been approved by the conference committee. Nelson said previously that the conference committee agreed on a few items where they found common ground covering voter referendums, student safety improvements (she cited lead in water and background checks), and special education paperwork requirements.

She had held up any debate over more controversial policy measures during the two weeks the conference committee waited for a budget target. Davnie worried then that policy would be set aside in favor of reaching a budget deal quickly.

Rep. Cheryl Youakim, DFL-Hopkins, pushed hard for policy inclusion throughout the process, trying to preserve changes supporters liked. She said wanted to talk about the legislation “not just to make sure our schools run well but also to be respectful of the four-plus months that our policy committee did function.”

Changes to teacher licensure opposed by some advocacy groups and Republicans were among those provisions nixed in the final deal. Legislators are scheduled to meet on education Wednesday afternoon, but their agenda isn’t outlined.

Walz had said earlier in the day Tuesday that he believed teachers would be understanding of the concessions they had to make to pass a budget with divided government. He listed four provisions he would be sure to have in the budget – two more than the first global deal included, which foreshadowed the deal he eventually helped reach.

“We put out a proposal early on. This is a big chunk of that,” Walz said.

But the state teachers union reacted unfavorably to the deal Tuesday with a statement from Education Minnesota President Denise Specht.

“This is a lukewarm outcome to a legislative session that had a lot of potential for Minnesota students,” Specht said. “We have a status quo in our public schools that is driving out educators, failing to serve the needs of thousands of students and was rejected by voters who elected a former educator as governor in a landslide last year. This budget makes some progress, but Minnesotans want transformational change.”