Plans for a slightly longer school year and the superintendent's push for more effective teaching will help create a $51 million gap in the Minneapolis school budget for the next school year, the school board will be told on Tuesday evening.
Minneapolis schools confront budget gap
Key question is how deeply to reach into reserves.
March 21, 2013 at 8:43PM
Although some operating cuts have been identified, the board faces a big decision on how far to dip into reserves. That would ease the problem for next year but make the budgetary imbalance worse in the years ahead.
The gap isn't all a traditional deficit between available money and current spending adjusted for inflation. That's because $19 million of it consists mostly of additional spending that Superintendent Bernadeia Johnson wants to advance her academic priorities. Those include improving instructional techniques, evaluating teachers and introducing more technology into classrooms.
Because the district is sitting on a budget balance of almost $81 million and expects to end the current year another $15 million in the black, that money could play a role in balancing next year's budget.
"My concern is the sustainability of the finances looking forward," board Chairman Alberto Monserrate said during a board finance committee meeting. One reason is that drawing down the surplus is a one-time fix and leaves the district more vulnerable to state budget cuts or shifts.
The board adopted this year's budget knowing that the 2012-2013 budget would have a structural gap of more than $11 million, more than half of which is higher pension costs for non-teaching employees.
Another $20 million has been added to the gap by decisions the board has already made or that are pending. The biggest example is the yet-to-be-concluded teacher contract, which is forecast to add at least $9 million even without a cost of living adjustment. That's because the district wants teachers to work a longer year, which adds to the payroll. The district also expects to spend $1.6 million to move to its new headquarters this summer and to keep Webster school available to handle expected enrollment gains.
Nearly $12 million more comes from Johnson's academic plan, part of which will pay for a state-required teacher evaluation system the district is developing.
There's also an extra $10 million for technology to support Johnson's academic plan. Some is already built into the budget, but district officials are weighing whether any of that could be deferred.
Just how easy closing the remainder of the gap is depends on how much the board wants to cut its $80 million fund balance, a bulwark against such factors as state aid cuts and something that allowed the district to avoid short-term borrowing for cash-flow reasons.
Current projects indicate that if the balance was trimmed to 12 percent of the general fund, the remaining gap would be erased. But finance officials say Johnson doesn't want to go below 13 percent, which means a $5 million gap under current scenarios. They say that relying on the surplus to balance budgets only creates a more serious budget imbalance in the school year after next, when they project a $44 million deficit.
Robert Doty, the district's new financial chief, said the district needs to more closely follow its strategic direction with budgets, and he hopes to instill more financial discipline. Forecasting the magnitude of future deficits could prompt the district to pay more attention to balancing its books, he said.
Steve Brandt • 612-673-4438
