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Most vulnerable students to get one-two punch under sequester

The revenue streams that will be cut dramatically and immediately are directed at programs for disabled children and schools that serve children in poverty.

Washington's inaction on sequestration will deliver a one-two punch to Minnesota’s most disadvantaged students.
REUTERS/Jonathan Ernst

Political rhetoric about spreading out the pain notwithstanding, if it comes to pass the sequestration will deliver a one-two punch to Minnesota’s most disadvantaged students. The two revenue streams that will be cut dramatically and immediately are directed at programs for disabled children and schools that serve concentrations of children in poverty.

In fiscal year 2013, the state would lose $7 million in Title I funds, which are used to compensate schools for the extra cost of educating impoverished students. The U.S. Department of Education estimates this would mean the loss of 100 teacher and aide jobs and the elimination of support for 8,000 children and 40 schools.

Also sequestered immediately would be $9.2 million in federal special-education reimbursement. Because schools can’t cut programs for disabled kids or turn them away, administrators would need to find funds to pay for the estimated 111 staff whose salaries would be slashed.

The cuts would further compound a crisis educators are desperate to bring to lawmakers’ attention. Reimbursement for legally mandated special-education services doesn’t come anywhere near the cost, and rising poverty means rising need.

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On Monday, MinnPost published the third installment of a series examining this juncture, which advocates have begun referring to as “The Tipping Point.” Published in January, the first two stories outlined the strain unmet mental health needs are placing on schools and laid out district leaders’ legislative wish list.

Cross-subsidy: a massive diversion of funds

This week’s story described the so-called cross-subsidy, the funding wrinkle where massive cuts in state funding for public education have been hidden over the last decade. Schools already must divert some $600 million, or nearly a fifth of state aid for each student, to make up the shortfall.

That’s nearly twice as big a gap as a decade ago when a combination of structural changes to Minnesota’s tax system crafted by former Gov. Jesse Ventura and subsequent cost-cutting by then-Gov. Tim Pawlenty started the cross-subsidy’s upward spiral.

Hand-in-glove with the cross-subsidy, caseloads have shot up in recent years. Between 2001 and 2011 the number of Minnesota children with autism spectrum disorders, which can present some of the thorniest neurobiological challenges, rose from 3,800 to almost 15,000.

Gap has eaten up much of new funding

All told, 11 Minnesota districts shifted more than $900 per student into the cross-subsidy in 2011 and 22 more than $800. The gap has eaten up all but half a percent of new education funding over the last decade — before accounting for inflation. Eliminating the cross-subsidy would entirely resolve many districts’ deficits.

Even if Congress acts to head off the second fiscal cliff in two months, the gap automatically will grow by almost $150 next year. Sequestration would add another $161 per special-ed student. In addition, 700 preschoolers would lose the Head Start seats that help ensure kindergarten readiness, according to the White House.

Nationally, sequestration would eliminate $1 billion in federal funding for the Individuals with Disabilities Education Act in 2013, leaving schools scrambling to find ways to pay for 7,200 staffers. This reduction would put the federal contribution toward the cost of special education back to its 2005 level.

Source: Center on Budget & Policy Priorities via IDEA Money Watch
*Federal Pell Grants are exempt from sequestration

Cuts to special ed make up 28 percent of the $4.1 billion in education funding that may be eliminated in 2013. Under sequestration, overall education funding will be subject to cuts ranging from 9.1 percent in 2013 to 5.5 percent in 2021, according to the Center on Budget & Policy Priorities.

Less effect here than elsewhere

According to Minnesota Management and Budget, the pain caused by sequestration would not be as bad here as in other places. Federal funds make up 29 percent of the state budget and 18 percent of its per-capita GDP, vs. 23 percent on average. It's 49th nationally in per-capita federal expenditures and 47th in expenditures per-capita GDP.

Meanwhile, Minnesota's Legislative Auditor will release a report on its evaluation of the special-ed finance crisis to a joint meeting of the House Education Finance Committee and the E-12 Division of the Senate Finance Committee on Wednesday, March 6.

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