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Survey finds bleak metro school district finances looking even bleaker for next year

The Association of Metropolitan School Districts released a survey (PDF) Wednesday that shows member districts facing an expected $187 million funding shortfall for the 2011-2012 school year.

That’s the outlook despite 1,700 layoffs and $287 million in cuts schools were forced to make in response to two consecutive years of a state funding freeze and shifts in aid payments, the association reports.

And the financial picture assumes state education funding will remain at current levels — an assumption that’s about as fiscally sound as banking on winning the Powerball, given the state’s projected 2011 shortfall of $5.8 billion.

Have headlines like these become a blur of enormous but meaningless numbers?

Then let’s look at real-life finances for one district by spending a little time talking to Keith Lester. He’s been grappling with deficit spending since taking over as superintendent of Brooklyn Center Schools in 2005.

Under Minnesota law, school districts must balance their budgets. When they can’t, they must borrow. If the district’s general fund acquires a negative balance of 2.5 percent, it falls into a status known as statutory operating debt.

Falling into this funding hole means the district’s budgeting is subject to scrutiny by the Minnesota Department of Education. Administrators are required to prepare three-year reports showing how they will get out of statutory operating debt which, in theory anyhow, they can’t stay in forever.

Brooklyn Center has been in statutory operating debt for 10 years. A state audit done when Lester took over five years ago found that the district overspent its way into the red but has been unable to get out because of chronic underfunding.

Two years ago, Brooklyn Center was $2 million in the hole. Thanks to some painstaking number-crunching, Lester has been able to reduce that to $1.4 million this year.

He faces a funding shortfall of $825,000 next year. Barring the appearance of a genie-bearing lamp, this will drive the district’s debt back up.

He’s gotten creative about bridging the gap. Perhaps the savviest thing he’s done is to turn the district’s two main schools into arts magnets and to invest in International Baccalaureate status.

The combination has proven popular with families outside the district, particularly disaffected Minneapolis families. Open enrollment now accounts for 35 percent of Brooklyn Center’s student body.

“These kids bring revenue with them,” Lester noted — unrestricted revenue, which can go for things the grants and other stop-gap funds he’s gotten good at raising can’t.

Two years ago, Lester got an arts focus grant. “We hired a dance teacher but laid off an English teacher,” he said. “English is a core subject. Class sizes went up in English.”

Until this year, neither school had a librarian during Lester’s tenure. He got a grant to put someone in each building half-time this year, but that funding will dry up at the end of the year.

What happens to a district that can’t dig its way out of statutory operating debt? The state can reduce its funding.

Aside from another Minnesota Miracle, what would enable Brooklyn Center to dig out? Lester’s reply is immediate: “Equitable funding.”

School districts that serve high numbers of impoverished students get extra money, but the formula for handing it out is outdated. Minneapolis and St. Paul get $415 per student in integration aid. At 75 percent, Brooklyn Center’s poverty rate is essentially the same as either of the larger districts, but it gets just $129 per head.

“We look like Minneapolis and St. Paul,” Lester lamented. “But if we were funded like them, it would mean an additional $1.5 million” — the equivalent of the district’s debt.

Add to this the district’s ranking lowest in operating levy in the metro area: $337 per pupil. It’s anybody’s guess whether its working-class voter base will renew the district’s levy next fall, but assuming it passes, Lester is quick to point out that the properties taxed are modest.

Which is a tidy segue back to the survey. AMSD Executive Director Scott Croonquist notes that just two metro area districts forecast something other than continued hemorrhaging: Minnetonka and Orono.

Both anticipate being able to balance the budget without cutting or borrowing. Each recently passed a healthy new levy.

Of course, there’s nothing like a great school system to buoy property values.

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Comments (3)

  1. Submitted by Ron Gotzman on 09/09/2010 - 10:05 am.

    Will there ever be enough money to satisfy the largest special interest group in the State?

  2. Submitted by Thomas Swift on 09/09/2010 - 11:11 am.

    Here’s a headline the public sector needs to see:

    “Survey finds bleak Minnesota residents’ finances looking even bleaker for next year”

  3. Submitted by Bernice Vetsch on 09/10/2010 - 09:21 am.

    From what I’ve read about Race to the Top, it may be as injurious to public education as was the test-based (and underfunded) No Child Left Behind.

    Perhaps instead of yet another top-down directive to schools from a Washington executive with no real background in education* — but eager to fire teachers and to close schools and replace them with charters — wouldn’t the children of America be better off if the Feds used that Race to the Top money to get every school district in America out of debt? That would be REAL help.

    *Arne Duncan’s “improvements” to Chicago’s schools were studied by an independent body of Chicago businesspeople and found wanting. Some of the schools that seemed to have improved, for instance, had simply lowered their requirements for passing the mandated tests.

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