Q&A: District 196 Finance Director on Impact of Proposed State Education Budget

Both the Minnesota House and Senate passed Omnibus Education Finance bills last week that would make sweeping changes in both the financing and administration of the state's pubic schools.

At a local level, much attention has been given to the news that District 196 schools would receive more than $100 additional funding per student next year under both the House and Senate versions of the bill. The bill also freezes special education reimbursement and reallocates money currently being used by local school districts for integration services.

District 196 Director of finance Jeff Solomon recently spoke with Rosemount Patch about the impact both bills would have on the district's bottom line. While there are still many details to be worked out between the House and Senate versions as well as the plan put forward by the Governor, it's clear that the "more funds" statement is only part of the story.

Rosemount Patch: Under both the House and Senate bills, funding for special education services would be capped beginning next year. What kind of impact would that have on District 196 finances?

Jeff Solomon: The House and Senate bills are nearly identical in language when it comes to special education. Both of them are suggesting that when it comes to special education, the growth factor in the budget would be essentially frozen. What that would do at the state level would be to freeze the appropriation, to freeze the level of special ed funding. Both the regular special ed funding and what is called "excess cost" aid.

Both the House and the Senate have fiscal analysts that calculate out their proposed language and try and calculate out the fiscal impact that it would have on the state appropriation and then how it would impact the local districts. The House analysis basically showed there would be a takeaway of revenue on a per district basis. The Senate analysis, looking at essentially the same language as the House, was showing the bill would have a neutral impact. Meaning the districts wouldn't see any additional money, but they wouldn't see any negative impact either.

I've talked to the representative at the Association of Metropolitan School Districts, and the consensus seems to be that the Senate had probably made a miscalculation and that the House estimate was more accurate. And that there would be a negative impact to school districts as a result of the freeze.

Rosemount Patch: Is there a way for you to estimate the impact this freeze would have on the district? Much of this special ed spending is federally mandated, so if you're getting less money from the state, it would have to come out of the district's general fund.

Jeff Solomon: Exactly. By freezing that factor in the special education funding, the mandate for service, both from the federal and state level, are more expensive than the categoric funding that is provided by the federal and state governments. Now it was always intended to be that way. The district is supposed to use part of their regular funding to supplement or pay for special education mandated services.

But at the federal level, that has always been an ongoing dispute and complaint. When these laws were passed, the federal government had intended to fund 40 percent of those federal mandates. Currently, they only fund at about a 19 percent level. So over the past 30 years that has been an ongoing underfunded mandate.

The same thing is true at the state level. Along with the federal mandates, the state has created additional mandates the local districts have to follow. The categoric funds the state has made available for special education is also underfunded.

Now by the state freezing the spending, they're anticipating it will save about $264 million from the state appropriation and that in turn is a takeaway from local school districts.

Rosemount Patch: What does that mean specifically for District 196?

Jeff Solomon: For us that results in about a $58 per student reduction in funding from the level that is in the law right now. On the other side, the House was proposing about a $34 increase per student in the funding formula. When you combine the two, you were looking at about a $24 per student net loss.

Rosemount Patch: I was at a public forum last week , and there was a lot of talk that the district was going to see an increase in funding per student next year.

Jeff Solomon: I would assume they are referring to the House proposal. That proposal added the $34 per student to the basic funding formula, then they were taking away $58 per student in special education funding. Then they were adding a one-time revenue, funds they were calling a "compensatory education grant." They applied those funds to the twenty largest districts, excluding Minneapolis, St. Paul and Duluth.

So when they're referring to District 196 coming out ahead, they're correct for the first year, if the House language is eventually accepted. But it's one-time revenue. So it's a win for the first year, because with all those components the district would be coming out ahead by $107 per pupil. But the next year when that one-time revenue was no longer there, the net result would be about a $20 per pupil reduction from where we are right now.

(To see the specifics of the House estimates, see the PDFs attached to this story).

to read Jeff Solomon's discussion of the proposed changes in the integration funding and what impact that might have on District 196 schools in part two of this interview.