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Repair of special-ed funding gap is missing from omnibus ed bill

Over the last decade, the so-called cross-subsidy has mounted to the point where many, many districts divert some 20 percent of their general-ed funding.

“We would have loved to have included [a cross-subsidy fix]," explained Rep. Paul Marquart, "but what we decided to do is spend dollars in areas where we really know they are going to make the difference, so we started out with early childhood."
MinnPost photo by James Nord

They say politics is a cynical business. And yet they also say journalists should shy away from truisms. They have no advice, however, when there’s no adequate synonym for a cliché.

Yesterday the state House of Representatives Education Finance Committee released its proposed omnibus E-12 finance bill, essentially the potential master plan to all spending over the next two years. Lawmakers will do the “walk-through,” the literal plain-English recitation of the contents Wednesday, so a thorough analysis will have to wait.

We can’t sit back, though, without making one jaded observation: One of the worst problems in Minnesota’s badly broken education finance system has gone wholly unmentioned. It’s a problem that has resisted fixing, in part because it’s more politically expedient not to touch it.

It’s spending that districts can’t avoid

Because the state has never come close to fully funding its share of schools’ special-education costs — spending that districts can’t legally avoid or easily cut back on — virtually all Minnesota districts must siphon off a portion of their general per-pupil funding to make up the shortfall.

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Over the last decade, this so-called cross-subsidy has mounted to the point where many, many districts divert some 20 percent of their general ed funding. There is widespread agreement that the problem has morphed into a crisis. And, as of a few weeks ago, there is a Legislative Auditor’s report that renders the situation crystal clear.

(And of course a MinnPost special project that looked at what educators are calling “the tipping point,” the effect of the cross-subsidy and of a parallel crisis in students’ unmet mental health needs. Check out particularly the MinnPost data team’s slick interactive map of the cross-subsidy’s impact on individual districts.)

In his modest-nod-to-all-needy-parties budget proposal, Gov. Mark Dayton asked for an increase to general ed funding in the first year and put $125 million toward beginning to pay down the more than $600 million cross-subsidy in the second.

Alas, not only is funding special ed a perennial political loser, the last decade has taught lawmakers that the cross-subsidy is a pretty good hiding place for financial shenanigans.

Fixing it ‘leaves you less to put on the formula’

Now retired, former Roseville DFL Rep. Mindy Greiling explained it thusly: “Lawmakers quickly learn there’s no political profit in addressing the cross-subsidy,” she said. “It leaves you less to put on the formula.” The formula being the bottom-line, annual minimum dollar amount the state reimburses districts for every student.

It’s much more politically expedient for legislators to go home after the session and announce that they secured “new money” for schools, even if the cross-subsidy — and inflation! — mean it’s already spent.

For a long time, school administrators stayed mum. “School districts can’t talk about this,” said Greiling. “If you say there’s plenty of money for the schools but for the cross-subsidy, then you set up a dynamic of ‘why should they get a class size of 12 while my kid is in this overstuffed classroom?’”

Instead of addressing the cross-subsidy, the House proposal would increase the amount of per-pupil general education funding by 2 percent in each year of the biennium. Their likely calculus, according to Capitol wags: They have to raise taxes, so they had better have something to show for it.

On Tuesday, Rep. Paul Marquart, chairman of House Education Finance Committee, explained the decision: “We would have loved to have included that, but what we decided to do is spend dollars in areas where we really know they are going to make the difference, so we started out with early childhood. That was number one. And all-day kindergarten, we’re going to make a huge investment there. And then we thought the rest should be as much as we can put on the formula so all schools get that equally.”

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‘It’s not jazzy’

The committee’s ranking Republican, Belle Plaine’s Kelby Woodard, criticized the decision: “They recognize that we need to do something about it and kind of push it off into the next biennium. If it’s something that’s that important, we ought to be putting money towards that. It’s not jazzy. It’s not all-day kindergarten, but it’s important, and it needs to be addressed within our existing resources.”

One final note only a cynic would sound: What irony that a party that came to power after a long decade of simmering voter discontent with school finance shifts is using a shift to try to stay there.