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Gov. Mark Dayton signs legislation passed during the special session.

Elizabeth Flores, Star Tribune

Budget deal means big changes for schools, health

  • Article by: BAIRD HELGESON, MIKE KASZUBA and ERIC ROPER
  • Star Tribune staff writers
  • July 21, 2011 - 7:33 AM

Minnesotans awoke Wednesday to a new state budget that clamps down on spending, makes big changes in education and health care, and borrows heavily to make ends meet.

The $35.7 billion budget ends a nearly three-week state government shutdown and sends 22,000 laid-off workers back to their jobs, where today they will begin reopening state offices and digging through the backlog of work.

They will return to an operation transformed by changes forced largely by sagging revenues, as the state finds itself still trying to emerge from the worst economy in decades.

"I'm not entirely happy with what I'm signing into law," DFL Gov. Mark Dayton said after putting his signature to a dozen budget and borrowing bills that wiped out a $5 billion deficit. "It's not what I wanted, but it's the best option available. ... It gets Minnesota back to work."

Going to school

Few areas of state spending will be affected more extensively than education.

School officials must adapt to the Capitol compromise that will delay another $700 million in funds due to districts statewide until the next two-year budget cycle. In addition, some key changes administrative changes proposed by Republicans remained intact in the final K-12 spending bill.

Chief among them is the elimination of integration aid beginning in 2013. That money, which went to the Twin Cities and Duluth to encourage racial integration, will be controlled and redistributed by a 12-member panel.

Changes meant to place new emphasis on student achievement also survived.

School districts will also have to start new periodic evaluations of teachers based on a loose set of guidelines. Thirty-five percent of that evaluation must be based on student academic growth. If districts and unions cannot agree to an evaluation plan, they must use one outlined by the education commissioner.

The state also will begin rewarding extra aid money to districts based on the number of students proficient in reading. And while most collective bargaining changes were stripped out, the measure repeals a law that penalized districts for failing to reach an agreement with their union by Jan. 15.

'Bending the curve down'

Another area that was a major focus of spending cuts and reforms was the growing health and human services budget, where spending is expected to reach $11.3 billion.

The new budget cuts or delays millions of dollars in payments to hospitals, doctors and health plans. It also penalizes hospitals that don't reduce the number of patients who reenter the hospital within 30 days of discharge and gives vouchers to move about 7,200 lower-income adults from the state-subsidized MinnesotaCare program onto private health insurance.

Several health-care pilot projects testing different ways to pay for care also got the go-ahead in the final bill, all of them growing out of health-care overhaul laws passed by the 2007 Legislature. Some of the moves will be closely watched by health-care advocates, including ones that sharply cut services that help keep older and disabled people out of more expensive institutional care and cut payments to some families helping care for disabled relatives.

The state also found a way to have prisoners reduce some health care costs. In the state's corrections budget, it stipulates that prison inmates would now have a health care co-pay of at least $5 for every doctor visit.

Changing the way Minnesota pays for health care "is putting us on the road to reform," predicted House sponsor Rep. Jim Abeler, R-Anoka. "We're bending the curve down. We're cutting the cost of health care, especially down the road in years to come."

Bonds and cuts

The new Republican majority came into the session with high hopes of imposing reforms they have sought for decades. In the end, they won several changes they say will reduce the cost of state government.

State leaders approved a pilot program allowing the state to sell bonds so investors can profit when nonprofit groups take on duties that reduce the demand for state services.

The new law also requires companies with a state contract worth more than $50,000 to use the federal E-Verify program to ensure employees are legally permitted to work in the country.

State budget officials also must look into ways make purchasing more efficient and design a performance pay program for state workers. The new law also imposes a 6 percent workforce reduction by 2013, much of it to be achieved through attrition.

Both sides approved $450 million in spending from the Legacy Fund, generated by a state sales tax increase voters approved in 2008. The pot of money represented a rare source of new spending.

Minnesota Public Radio, which came under criticism from some Republicans, will no longer get Legacy funding directly but have to compete for money through a new $2.65 million annual competitive grant program.

The Legislature meanwhile did not change open meeting requirements for the Lessard-Sams Outdoor Heritage Council, an advisory group that recommends Legacy money for outdoors projects. The issue was heavily debated on the last day of the Legislature's regular session and had stalled a vote on the Legacy funding bill.

One late prize nabbed by the governor was the passage of a $500 million bonding bill, which DFLers say will create thousands of jobs and help kick-start the economy. The bill will prove a boon to the state's colleges and universities, which will received 44 percent of the funding.

Among the projects: A $51.3 million physics and nanotechnology building for the University of Minnesota, which also gets $12.5 million to build a relocated biomedical nuclear magnetic resonance imaging lab, and mitigate impacts from the vibrations caused by the Central Corridor light-rail line. Also included: $16 million to renovate the Coon Rapids Dam, $8 million to continue developing the new Lake Vermilion State Park -- which former Gov. Tim Pawlenty had championed -- and $300,000 for grave markers of the deceased residents of state hospitals and treatment centers.

There's even $1 million for a Minnesota African American History and Cultural Center. In February, Dayton had received a scathing letter from a proponent of the museum for initially leaving it out of an earlier bonding request.

Staff writers Bob von Sternberg and Warren Wolfe contributed to this report. baird.helgeson@startribune.com • 651-222-1288 mkaszuba@startribune.com • 651-222-1673 eric.roper@startribune.com • 651-222-1210

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