Minneapolis school deficit looms–what will voters do?

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The Minneapolis school board faces difficult decisions in the coming months as a trying financial forecast butts against a desire to fund programs under its newly minted strategic plan. One option now emerging is to ask voters for an increase in this fall’s school referendum.

This referendum debate will offer a new twist. Historically, referendum backers got voter buy-in based on a promise to lower class sizes. That promise resonates with parents who want more individualized attention for their children, teachers who want more manageable classrooms and the general public, which associates small classes with better education.

However, the district’s new strategic plan downplays the importance of across-the-board class size reductions and focuses instead on teacher and principal quality and other reforms. School board director Pam Costain said referendum backers would have to have a new conversation with voters, explaining why the district is changing its focus.

“Part of the problem is that because class size has been the only conversation for the referendum for at least 10 years, maybe more, … we don’t have any precedent about talking to public about other things—counselors, high school reform, technology, early childhood,” she said. “These are all things that are really critical.”

Costain is the board’s referendum liaison. She will work with an independent volunteer committee set up to advocate the referendum. The committee’s co-chairs are former School Board Director Rev. Al Gallmon and Courtney Cushing Kiernat, chair of the Kenwood School site council and former fundraising consultant on Mayor R.T. Rybak’s reelection campaign.

Minneapolis residents passed school referenda in 1990, 1996 and most recently in 2000, on a lopsided 114,152 to 43,021 vote.

Financial outlook

The School Board faces several challenges to shore up its immediate finances and long-range reform plans.

First, Chief Financial Officer Peggy Ingison projects a $13.1 million budget shortfall for the district for the 2008-09 school year, about three percent of its $433 million general fund. Much of the shortfall results from lost money from declining enrollments and the difficulty in cutting fixed costs, such as school buildings. The district also faces rising transportation and health care costs. The shortfall only gets bigger in the following years. Before the Board funds anything new, it has to figure out how to fix that budget hole.

Second, the School Board’s 2007 Strategic Plan has added costs. The plan has nine broad recommendations, such as developing a highly effective principal corps and a high-performing teacher corps. District staff is beginning to put costs on specific proposals. According to district documents, costs include $600,000 for principal academies and $2.8 million for a new math curriculum and teacher training. While the plan is still in flux, staff estimates needing a ballpark figure of six million dollars in new money for Strategic Plan efforts in the 2008-09 school year.

Third, the district’s current referendum expires after the 2009-2010 school year. The referendum generates $27.5 million or seven percent of the district’s general fund this school year, enough to hire more than 320 teachers, according to a district report. If this fall’s referendum fails, the district will have a $30 million hole to fill starting in the 2010-11 school year.

Following the Money

In 2008-09, the Minneapolis Public Schools anticipates $419.9 million in revenue. Major sources include the following:

• General state per pupil aid: $191 million
• Special Education: $65.1 million
• Compensatory Aid (for high poverty schools): $53.2 million
• Referendum: $29.5 million
• Integration Aid: $17.2 million
• Limited English Proficiency: $5.1 million
• Other: $58.8 million

Whither class sizes?

Against that financial backdrop, the district will have to address the potential political hot potato of class size expectations.

During a recent school board meeting, Director Sharon Henry Blythe asked questions about the value of lower class sizes and referred them as a “sacred cow.” Director Chris Stewart said the district could not afford the kinds of class size reductions needed to get academic results. Stewart’s comments stemmed from a report done by McKinsey & Company, which provided the backbone of the district’s new strategic plan.

“Class size reduction produces positive results for some, but not all, student groups,” the McKinsey report said. “Class size reduction can be effective when very carefully and selectively applied.” The report summarize the Tennessee STAR study, which said it took class sizes of 15 or fewer to get positive gains in K-1 grades – “but only for them and not any other students.”

Minneapolis Federation of Teachers President Robert Panning-Miller said putting less emphasis on class size reduction would play poorly with teachers. “Class size is at the top of the list in terms of what teachers think is important,” he said, and it makes a difference on classroom behavior.

The reality for Minneapolis schools is that class sizes have gone up since the last referendum.

Since the 2000 referendum, average K-2 class sizes have increased from 19 per class to 26 per class, according to district data. Average grades 3-8 class sizes increased from 25 per class to 32 during that time. (There are exceptions. High poverty schools get extra aid and often use it to hire more teachers to lower class sizes.)

Chief Financial Officer Ingison said one of the lessons learned from the past referendum is the district can’t promise lower class size based on the referendum money. Other major funding variables, such as state aid and enrollment, affect teacher hiring.

Polling ahead

Ingison told the school board January 15 that increasing the referendum request is one option for paying for the strategic plan’s new initiatives.

According to Minnesota Department of Education data, the Minneapolis school referendum levy is approximately one-third of the maximum allowed by state law, and it is currently below the state average.

Costain said the referendum committee would do polling to gauge public support for increased spending, and specifically whether residents are willing to spend more for the kind of reforms the district has outlined in its strategic plan.

The district will have to undo a perception of its own making, she said.

“Because class size has been so central to the referendum, we are responsible for the public believing that class size matters most,” she said. “We got ourselves in our own pickle.”

For more details on the strategic plan, go to the district’s Strategic Plan page and click on links in the right-hand column.

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