Minneapolis Public Schools face a ballooning fiscal crisis in the 2024-25 school year. New labor contracts, continued enrollment declines, and the failure of the state legislature and governor to use any of the $9.3 billion surplus to provide additional funding for public school students puts the district in a troubling financial place.  

Tonight the board of education will likely vote to approve a budget for the 2022-23 school year, with a $90 million gap. The funding gap will be closed through a combination of cuts to administration, use of fund balances, and temporary federal COVID relief funds.

The district will continue to operate 56 traditional school sites next year with capacity for approximately 43,000 students. Enrollment at these buildings is expected to decline to just over 26,000 students, leaving buildings at just under 61% of capacity systemwide. Overall, the district expects to have 28,111 students, including those at alternative schools, special education schools and the K-12 online school.

Like this school year, the federal COVID relief funds, known as ESSER funds, will stabilize the district budget in the 2022-23 school year. The district plans to use the remainder of ESSER funds in the 2023-24 school year to close its expected budget gap. This sets up a fiscal cliff for the district in the 2024-25 school year.

The district revised building budgets after the educators strike to adjust for the additional costs of staff, changes to the required staffing under the new contracts, and expected changes in enrollment at some schools. Overall, school allocations were increased by $2.8 million compared to the initial budget proposed in March.

Prior to the educators strike, MPS principals completed building budgets on March 4. Because of changes made to staffing requirements and wages under the new contracts, the district revised the original building budgets, allocating an additional $2.8 million to schools in a second budget process in April. At the same time, the district revised its enrollment projection for next year downward by 962 students.

On May 3, the district released the school budget allocations for the 2022-23 school year. The district releases this information each year as part of the budget process. This document details how much money each school receives in each funding category, the projected enrollment for the upcoming school year, and the projected percent of students experiencing poverty in each building.

The district has not released the school budget allocations for the budgets constructed in March. Through a public data request, Southwest Voices has obtained these original school budget allocations, and is sharing that information with the public.

Minneapolis Public Schools uses site-based budgeting, which gives principals control over staffing and program decisions at each school.  

Minneapolis Public Schools uses site-based budgeting for its schools. Typically, school principals receive an allocation of funds for their school for the next school year in mid-February, along with minimum staffing guidelines, which the district calls the “predictable staffing model”, plus guidelines on how restricted funding sources can be used. At MPS schools, the most common types of restricted funds are state compensatory education revenue and federal Title I revenue.

Principals construct a budget that meets the predictable staffing model requirements, as well as the guidelines on restricted funding. The school site council, which is made up of families, staff and community members, acts in an advisory role in the budget process.

An advantage of site-based budgeting is it puts control over school staffing in the hands of building leaders, who many feel know best what their students need. At some MPS schools, the budget allocation is just enough to meet the predictable staffing model, and principals have little discretion over staffing and programming. This is most common at the district’s lowest poverty schools. At other schools, principals have more flexibility about staffing and programming.

A disadvantage of site-based budgeting is schools end up without a uniform offering of specialists, electives and support staff. One elementary school may choose to offer art, music and physical education, using its specialist funding for three full-time staff members. Another elementary school may choose to use the same funding to offer art, music, physical education, media and STEM, taught by one full-time teacher and four half-time teachers.

One middle school principal might choose to use part of their budget to add an additional social worker to support student mental health, while at another middle school, the principal might choose to add an additional math teacher to reduce class sizes. In a high school, principals might decide between offering an additional elective, like dance, or add an additional counselor.

When staffing and programs change at district MPS schools from year to year, those changes are ultimately made by principals, except when the school board or administration makes changes to its predictable staffing model. At schools where enrollment is declining, principals have to decide which staff and programs to keep while funding declines.

A comparison of the March and May school allocations shows the largest changes were the elimination of differentiation specialists at elementary schools, and an increase in special education funding to cover the higher staff costs under the new contracts.

Senior Academic Officer Aimee Fearing announced that the half-time elementary school differentiation specialist positions were eliminated from the predictable staffing model at the May 3 Finance Committee meeting. This change reduced allocations to schools by $2.9 million in the May 3 school allocations compared to the initial allocations in March.

The second largest decrease in school allocations was in the category called “Basic per student ESSER.” As the name implies, this funding is a per student amount of ESSER funding allocated to every school for each student. From March to May, this funding was reduced by $1.7 million. The amount per student declined from $500 per student in March to $454 per student in May. The total was further reduced because of the decrease in projected enrollment.

The largest increases to school allocations were in two categories for special education funding. Both show the impact of changes to the educator contracts. Education support professionals, which include special education assistants, were offered an additional five hours of work per week as part of contract changes to bring their annual earnings closer to $35,000 per year.

In the school allocations, the funding for these five hours per week for SEAs is labeled as “Referendum SEA 5 hours.” Referendum funding is allocated to each school to cover the cost of these additional hours. This category increased by $2.8 million.

The second significant change in funding was to school allocations for special education funding, labeled in the allocation spreadsheet as “Special Ed Citywide.” The category is for special education funding that is allocated to each school for students who spend the majority of their school day outside of a general education classroom. This allocation increased by $1.1 million.The district committed to increasing funding to schools to cover the cost of wage increases for classroom teachers in the revised allocations. This is reflected in this increase in funding.

The largest reductions in projected enrollment from March to May were at many of the highest poverty schools in the district, while projected enrollment at most low poverty schools was left unchanged.

The schools losing the most students from the updated enrollment projections between March  and May are some of the highest poverty schools within MPS, including Bethune, Bryn Mawr, Cityview, Hall, Jenny Lind, and Whittier elementary schools, and North and Edison High Schools, which all lost more than 5% of their projected enrollment in the revised allocations.

Most of the schools where enrollment projections either didn’t change or increased were some of the lowest poverty schools in the district, including Field, Hale, both Lake Harriet campuses, Kenny, Burroughs and Armatage elementary schools.

Small changes in enrollment at the district’s highest poverty schools have a large impact on their funding because the district allocates more funding per student to high poverty schools.

Any decline in enrollment corresponds to a decline in funding for the school. But the district allocates more money per student to schools with a larger percentage of students in poverty to reflect the greater needs many of these students have. Enrollment declines in high poverty schools can lead to a significant decrease in the overall budget for the school.

Looking at two schools, Bethune and Marcy, that had nearly identical decreases in their projected enrollment, the impact at one school is much more significant than the other.

The budget impact of a decline in enrollment can be difficult to see with a casual glance at the school allocation spreadsheets. For example, Bethune, an elementary arts magnet school located in North Minneapolis that is majority students of color and 85% of students are experiencing poverty, is receiving $20,000 more in its budget than it originally had in early March. Its 2022-23 school year budget is $5 million, about $23,000 per student. The school had its projected enrollment reduced by 29 students from the March budget to the May budget.

For Bethune, 29 students with $23,000 per student in funding represent about $665,000 in funding for the school. This is equivalent to funding for 6.5 full-time teachers, using the district average cost of $105,000 per full-time teacher.

As a comparison, Marcy, which is an elementary arts magnet located in Northeast Minneapolis, where 55% of students are experiencing poverty, had its projected enrollment reduced by 23 students from the March 4 to May 3 allocations. Marcy’s school allocation is also around $5 million for 2022-23, about $11,000 per student.

For Marcy, 23 students with $11,000 per student in funding represent about $260,000 in funding for the school. This is equivalent to the funding for 2.5 full-time teachers, just a third as much as at Bethune.

Southwest Voices has asked Minneapolis Public Schools for an explanation of why the revised enrollment projections show the largest declines at the district’s highest poverty schools, where these revisions have the largest impact on school allocations, while enrollment projections were left unchanged at many of the lowest poverty schools in the district. As of publication, we have not heard back.

Schools with a high proportion of students experiencing poverty have a large portion of their budgets made up by restricted funding, which limits the ways that principals can allocate these funds.

The additional funding allocated to schools with a high proportion of students experiencing poverty comes with reporting requirements as well as restrictions on how it can be used.  On average, restricted funds make up about 15% of total school allocations.At Bethune, where the district projects 85% of students will be experiencing poverty next year, nearly 25% of its budget comes from Title I and compensatory education revenue. For comparison, at Marcy, which is also an elementary arts magnet school, just 16% of its budget is made up of restricted funds. At Lake Harriet Lower, which has about 4% of its students next year expected to be experiencing poverty, the building budget is less than a tenth of a percentage of  restricted funds.

The proportion of school budgets made up of special education funds varies significantly across buildings.

Overall, about 20% of school allocations are made for special education services at district schools. There is a correlation between schools that have a higher proportion of students experiencing poverty and the budget share allocated to special education, which is most pronounced in the elementary schools.

At Cityview, where the district expects 88% of students to be experiencing poverty next year, nearly 35% of the building budget is allocated for special education services. At Hale, however, where the poverty rate is projected to be just 9% next year, only 12% of the building budget comes from special education funding.

The number of schools that receive so-called “small school subsidy” funds nearly tripled from the 2021-22 budget to the 2022-23 budget due to enrollment declines.

Because the predictable staffing model requires a number of staff, regardless of the number of students. School funding is allocated primarily based on enrollment. To make up for that discrepancy, the district provides schools with less than 250 students some additional funding each year.

In the 2021-22 school year, four elementary schools received this funding: Anishinabe Academy, Cityview, Hall, and Lake Nokomis Wenonah.

For the 2022-23 budget, seven additional  elementary schools will receive the small school subsidy: Bethune, Hiawatha, Hmong Academy, Howe, Jenny Lind, Nellie Stone Johnson, and Pratt.

This year the small school subsidy ranged from $30-50,000 per school. The small school subsidy at elementary schools increased from $127,200 in the 2021-22 budget to $456,400 in the 2022-23 budget.

The number of elementary schools requiring a subsidy to meet the predictable staffing model more than doubled, and the amount of funding in this category increased by seven times.

Some schools have a combination of low enrollment and low proportion of students experiencing poverty such that the allocations they receive are not enough to meet the predictable staffing model requirements. In the 2021-22 budget, seven elementary schools received just under $200,000 in so-called “Targeted ESSER programming” funds in order to have enough money to pay for staff under the predictable staffing model. These schools were Armatage, Burroughs, Kenny, Field, Hale and both Lake Harriet campuses. The poverty rates at these schools are among the lowest in the district, with only Armatage (13.6%) and Hale (11.6%) having more than 10% of students experiencing poverty.

In the 2022-23 budget, there are 15 schools receiving over $1.4 million in Targeted ESSER programming funds. This is seven times more funding than was allocated in the 2021-22 budget. The schools include the seven schools from this year plus Hiawatha, Howe, Kenny, Loring, Northrop, Las Estrellas, Waite Park, Windom and Lake Nokomis Wenonah. With the exception of Las Estrellas and Loring, none of these schools has more than 30% of students experiencing poverty.

The combination of declining enrollment, inadequate state funding, and high costs of operations persist as challenges for Minneapolis Public Schools. The proposed budget uses a combination of temporary federal COVID relief funds, fund balances, and cuts to administration to fill a nearly $90 million budget gap for the next school year, without making any changes to address the looming fiscal cliff for the district. Projected enrollment declines will have the most impact on the district’s highest poverty schools, while the district is increasing the subsidies to small schools, particularly those with low poverty, to meet minimum staffing requirements.