Chronic deficits growing tiresome for Minneapolis, St. Paul school districts

The ongoing ritual of springtime budget cuts is bringing a new round of frustration and anxiety to parents in the Minneapolis and St. Paul school districts.

Under pressure from parents, Minneapolis school board members recently restored $6.4 million in cuts to middle schools and high schools — and sent district administrators scrambling to find budget fixes elsewhere.

In St. Paul, parents at the popular Capitol Hill Gifted and Talented Magnet are enraged over district plans to cut that school's budget while also reducing its enrollment — despite a healthy waiting list.

After years of back-to-back budget cuts, the two urban school systems are nearing the end of another painful fiscal year, with Minneapolis facing a $33 million budget shortfall and St. Paul a $17 million gap.

Both are preparing to ask voters this fall for more money to escape chronic deficits. They say the state and federal governments haven't done enough. They are supported in that argument by the Association of Metropolitan School Districts, which says its members are looking at a combined gap of more than $100 million for the 2018-19 school year.

But a Star Tribune review of audited financial statements for Minneapolis and St. Paul shows that the two main sources of school funding, state and federal aid and local property tax revenue, have risen steadily over the past five years, while enrollment in both districts has been flat or declined. Even after the budget-balancing moves of recent years, district spending continues to outpace revenue in both districts, driven partly by labor costs and higher special education services.

In the case of Minneapolis, the auditor, BerganKDV, also raised concerns about the district's budget practices in 2016-17. The "significant midyear budget amendments" required to make up for underestimated expenses "[call] into question the budget process and accuracy of the reports provided to the board or the adequacy of the means of communication," a letter states.

St. Paul Superintendent Joe Gothard notes that his district has been forced to spend $42 million of its general fund money on special education services. A proposal by Gov. Mark Dayton to ease the district's "cross subsidy" by $770,000 has failed to make the cut in the House and Senate proposals, he added.

If the district and its supporters fail to persuade voters to invest more in their schools, Gothard said, "the likelihood is very high" that St. Paul will face another deficit in 2018-19.

At the school level, Nick Faber, president of the St. Paul Federation of Teachers, said educators are resourceful, "and they're going to do what they need to do," but they also are tired of the budget cuts that have come with the underfunding of schools.

"It gets harder and harder, and people get more and more frustrated," he said.

Budget cuts from recent years are reflected in the Minneapolis district's most recent financial statements. Spending in major categories like administration, elementary and secondary instruction, and special education instruction fell in 2016-17 from the previous year, but the district still ran up a deficit of $7 million.

But with a projected $33 million deficit to erase, and more than 100 parents, students and employees packing an April 10 meeting aiming to protect their interests, district leaders were peppered with questions about why they didn't want to consider tapping reserves.

"We should take some risks with this budget in order to build a bridge for a better future," board member Don Samuels said.

Ibrahima Diop, the district's chief financial officer, replied: "My role is not a chief risk officer."

In the end, the board left the reserve fund untouched but ordered the administration to immediately restore $6.4 million to secondary schools and to find savings elsewhere.

On Friday, Superintendent Ed Graff posted a new list of cuts in transportation, professional development, athletics and elsewhere in place of the planned cuts.

Board Member Rebecca Gagnon, who pushed the proposal to restore $6.4 million, said parents told her they wouldn't back the district's push for $30 million a year in new funding this fall if it didn't mitigate harm to schools.

Andrea Childers and Logan Farnham, whose son is a freshman at Washburn, said they're transferring him to Henry Sibley High in Mendota Heights because of looming cuts. Childers is unsure whether she'll vote "yes" in the referendum. Even with restored funding, she said, she believes the district is fiscally irresponsible.

"I don't think they can fix it," she said.

St. Paul is in its fourth consecutive year of budget-balancing moves, and has so far resisted digging deep into reserves.

Like Minneapolis, it has lost growing numbers of children to charter schools and other school systems.

Still, parents at Capitol Hill were stunned to learn last week that their school's budget was being slashed by hundreds of thousands of dollars, and its enrollment will be cut, said Owen King, a PTO co-chair.

That seems nonsensical considering St. Paul is supposed to be trying to grow enrollment, said parent Melissa Dangaran.

King and Dangaran said St. Paul should consider shuttering unpopular programs or closing smaller schools that struggle to attract students. A district spokesman replied that shifting students from one school to another does not increase overall enrollment.

The district has a new strategic plan in the works, but Gothard said in February: "This plan is going to focus on teaching and learning. This is not an infrastructure plan."

In coming weeks, the district will commission phone surveys to gauge support for increased school funding.

Yet St. Paul and Minneapolis are far from alone. Scott Croonquist, executive director of the Association of Metropolitan School Districts, released survey results Friday showing that his member districts face shortfalls of more than $100 million and more than 200 staff layoffs.

The organization calls on legislators and Gov. Mark Dayton to tap the state budget surplus to increase special education funding to account for the $679 million that local districts have to spend to cover underfunding for those services.

The $100 million deficit estimate comes one year after 27 of the 40 member districts were eyeing deficits that totaled $97 million.

anthony.lonetree@startribune.com • 612-673-4109 faiza.mahamud@startribune.com • 612-673-4203