Minnesota schools face shortcomings despite recent increase in state aid

Last year, Democratic-Farmer-Labor majorities in the Minnesota Legislature approved what they considered historic funding for basic education.

School districts across the state had a total of US$2.2 billion in new financing for the 2024-25 two-year budget, an increase of almost 11% over the last state budget. But despite record funding this year, many school districts across the state still face budget shortfalls.

A recent survey by the Association of Metropolitan School Districts found that 70% of the state’s metropolitan districts expect deficits next year. São Paulo and Minneapolis schools are among them, and their projected deficits are among the largest – $108 million and $90 million, respectively.

Several factors are to blame, including the end of federal pandemic aid, inflation and declining enrollment. And school districts say the impact of increased state funding is partly mitigated by mandates associated with new spending, which could consume about half of their new funding.

“The number of new requirements and initiatives is largely part of what I think our people are feeling,” said Kirk Schneidawind, executive director of the Minnesota School Boards Association.

Pandemic aid

St. Paul Public Schools saw about $114 million disappear from its 2024 budget due to the end of federal aid, about 14% of the total budget, according to district data.

Much of the money in the third and final pandemic spending bill, the American Rescue Plan, went toward addressing learning loss and returning to school safely. In total, Minnesota received about $1.4 billion. But that money has run out, and many districts have had to reduce their budgets accordingly.

However, although SPPS’s enrollment decline has stabilized at about 33,000, it is still significantly below the 37,000 it was about a decade ago – a significant problem since state funding is tied to the number of students in a district.

And, as always, there is inflation, which eats away at government budgets. This has been particularly true in the era of the pandemic and its aftermath, which has seen significant growth in costs. The costs of operating a separate school — paid staff, school bus contracts and insurance have also increased, Schneidawind said.

Funding mandates

St. Paul schools will receive about $56 million in new state funding, softening the blow from the end of pandemic aid and other pressures. But there are restrictions.

Even as the Legislature approved new funding last year, some school district leaders warned that state mandates would mean the money could only do so much for schools — though lawmakers and DFL workers say the increases would offset a decades-long decline. in the state. help.

About half of the $2.2 billion in extra funding that schools got during last year’s legislative session, considered “historic” by DFL leaders, is tied to mandates on how to spend.

The Minnesota Association of School Boards says these spending mandates create difficulties for districts as they try to offer competitive salaries and spend money on facilities and maintenance.

The cost of most mandates is small, but when the 65+ mandates are combined, it represents about $1.1 billion that should be used for things like literacy programs like the READ Act, which received about of 75 million dollars.

Schools wanted programs like this, Schneidawind said, but the funding must be dedicated to new teaching and training materials.

Others included new civics and personal finance requirements, an ethnic studies requirement, new rules around school discipline, and school unemployment benefits.

However, about $410 million of the new funding is discretionary, meaning districts can use it however they want, according to the school boards association’s analysis.

GOP lawmakers took advantage of the mandates to criticize Democrats, who control the Senate, House and governor’s office.

But DFLers dismissed concerns about mandates and maintained their education budget. Gave a 4% increase to the per-pupil state funding formula in 2024-25 – tied to future increases in inflation – as well as a $663 million increase in state aid for special education and increased funding for English language learners at 87 million dollars.

And even though many districts face deficits this year, DFLers, labor groups and St. Paul Public Schools say the funding helps bring state education spending closer to where it was 20 years ago.

A spike in per-pupil funding in 2003

SPPS spokeswoman Erica Wacker pointed to a recent study by labor-affiliated think tank North Star Policy Action, which found that per-pupil state aid to Minnesota school districts peaked in 2003. At that time, it was US$14,374 in current dollars, but in 2023, this amount has shown a downward trend of around 3,000 dollars – around 21% less than in 2003.

These declines have caused districts to rely more heavily on local property taxes to support budgets, amounting to about $1,800 per student statewide.

Last year’s funding increase increased state aid by about $1,000 per student, according to North Star Policy Action’s investigation.

Meanwhile, St. Paul schools saw state aid drop from $18,122 per student in 2003 to $13,555 in 2024 — a 25% reduction. Last year’s state funding increase brought 2024 funding to $14,730, a roughly 19% reduction in state aid from 2003.

So while the mandates guarantee new funding for the district, the new money reduces overall costs, even though it is a fraction of what the district needs overall.

If lawmakers want to do something to address school budget deficits and raise education funding to levels equivalent to those seen 20 years ago, their next opportunity to take any meaningful action would be in the 2025 legislative session, when they will have to pass another budget. two years.

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