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As Minneapolis schools face cuts to close projected budget gap, here’s what to know

Minneapolis public schools are facing another dispute — this time over next year’s budget. The district is reviewing its finances after the teachers’ strike as the budget gap grew by $27.1 million, requiring adjustments, including cuts. The school board is due to vote on the budget next month.

Union leaders, teachers, students and at least one board member have publicly pushed back against some proposed cuts, saying the district needs to reprioritize.

The budget cuts, according to the district, are the result of the sharp decline in enrollment and the additional costs of new contractual agreements with teachers and support staff. In addition, inflation pushes up spending.

Here’s what you need to know:

Why have the budget figures changed?

The previously projected budget variance of $59.1 million increased to $86.2 million after the strike. District officials said it widened due to the rising cost of new union contracts — raises, bonuses and additional staff from counselors and social workers, among others — as well as declining registrations. Fewer students in the district means less money, since state funding is distributed per student.

What is the neighborhood plan?

The district plans to transfer some of the money from its general fund (the part of the district budget that covers many operating costs) and reduce each department’s budget by 5 percent. In many cases, this means letting vacancies disappear.

Individual school budgets are also being adjusted and federal pandemic relief funds will be reallocated to pay staff salaries, district leaders said. The federal government is requiring that 20% of relief funds be dedicated to addressing learning loss due to the pandemic.

The district says 78% of federal relief funds — about $125 million — will be used over the next two fiscal years to cover personnel and program costs.

In the 2022-23 budget, which is currently under review, the district is proposing to use $58 million in relief funds to maintain programs and staff.

The remaining relief money must be used no later than the 2023-24 school year.

The Minneapolis Teachers’ Federation says the district still has money in its general fund. What is it about?

Syndicate refers to the unallocated portion of the general fund, which functions as a rainy day fund. Now is the time to spend it, say union leaders.

It is the school board’s policy to maintain this unallocated portion at a minimum of 8% of estimated general fund expenditures for the following year, although it has only reached this threshold in recent years. Draining the general fund could lead to lower bond ratings, district leaders say.

Currently, the district has about $55 million in the unrestricted general fund, about $2.6 million above that 8% threshold, according to the district’s finance department.

What about individual school cuts?

Schools initially faced a 3% budget cut. But after transferring dollars from district central offices, the pool of money going to schools increased by 1%, according to district officials.

Still, schools had to reopen their budgets after the strike to account for updated enrollment projections and the costs of new teacher contracts.

The district of about 29,000 students expects to lose about 1,000 students next year — and the state funding they would have brought.

For some schools, that means job and program cuts, such as reducing the hours of some teachers.

What happens now?

Schools have submitted their budgets to district administrators with proposals for staff reductions.

The school board’s finance committee is expected to vote on the district’s budget at its meeting on Tuesday. The full board would then hear a final reading of the budget and vote on it at the June 14 meeting.

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