Minneapolis school leaders deal with budget woes by dipping into reserves

The financially strapped Minneapolis Public Schools approved its budget at a Tuesday evening school board meeting, agreeing to use reserve funds to plug multimillion dollar shortfalls.

This year's budget had a $13 million shortfall, and next year's is $21 million. The board voted to fix both by dipping into district reserves.

With an expected bump from state funding, the board voted to pull $16.5 million from its reserves to close next year's gap. But pulling that much money out of backup funds for next year means reserves would drop to dangerously low levels, threatening the district's ability to respond to other unexpected circumstances.

The majority of the board voted to pass next year's budget.

"I do support budgeting cautiously as a result of that and do believe this budget does that," said board treasurer Jenny Arneson.

Addressing the budget was an early priority for Superintendent Ed Graff, who took over in July. In February, he sent a note to the school board outlining a $28 million gap for the coming school year. He whittled that to $21 million by cutting 10 percent from central services and 2.5 percent from school allocations.

The budget aims to prioritize resources and "give each Minneapolis student a chance to succeed and graduate ready for college and career," Graff said at a May 9 board meeting.

"I don't believe that we should be cutting funds to our schools," Jourdain said.

District policy requires keeping reserves at between 8 and 13 percent of the district's overall budget, said finance chief Ibrahima Diop. Using reserves to cover shortfalls this year and next would put the district below that range.

This year's shortfall is spurred in part by underbudgeting for union contracts negotiated for the 2015-2017 cycle — a higher increase in salaries than anticipated — as well as underfunded transportation and utility services.

Next year's $21 million gap is due to operating costs, Diop said.

The district has had to fund hefty subsidies for special education and English language learner costs.

►Minneapolis schools announced in April that it would slash the equivalent of nearly 300 full-time positions. That would affect at least that many employees, because several part-time employees can make up one full-time position.

The cuts haven't gone smoothly. In April, roughly 100 people protested layoffs of educators, especially those of color, that happened during budget cuts. Protesters said staff was "pushed out for advocating for students," a move not tied to budget reductions.

The board voted to reinstate several of them, a position that principals opposed.

The Minneapolis Federation of Teachers backed a group of building engineers whose positions were being eliminated.

Graff said that the district has monitored equity among its staff.

"We're certainly not wanting to repeat ourselves in having to tap into our fund balance" to this degree, Graff said.

Beena Raghavendran • 612-673-4569