Questions from board directors about the district’s finances largely went largely unanswered at the Minneapolis Public Schools Board of Education finance committee meeting Tuesday night. Monthly financial statements for Minneapolis Public Schools appear to show the district’s general fund balance is $51 million less than originally projected but the district has not responded to questions from Minneapolis Schools Voices asking for clarification.

The district’s operating costs are currently exceeding its funding, despite recent increases in State aid and significant budget cuts last spring.

The district released its unaudited July and August monthly financial statements ahead of this week’s finance committee meeting which show the district had about $91 million in its general fund balance on June 30. This is about $51 million less than what the district had expected to have on hand, based on both its December 2023 pro forma and the budget the school board approved for the 2023-24 school year. The district had been using federal pandemic aid to cover the gap between its revenues and expenses and to bulking up its general fund balance over the past three years.

The district is planning to use about $60 million from its general fund balance to cover operating expenses this school year, according to the budget resolution approved by the school board in June. A lower than expected general fund balance by $51 million reduces the time the district has to implement cost-cutting measures, as it uses its reserves to cover its budget gap.

The district revised its general fund balance figure upwards in 2023 between its July and August financial statements. The July 2023 financial statements included a note indicating that a revision was expected once the annual audit was completed. Neither the July 2024 nor the August 2024 financial statements include such a note. Minneapolis Schools Voices has asked the district whether such a revision is expected this year, due to the $51 million discrepancy. The district has not responded.

Director Joyner Emerick asked about the discrepancy at the finance committee meeting on Tuesday.

In response, Senior Finance Officer Ibrahima Diop said, “We are audited every year, and the auditors, until they are done, we wouldn't know what the fund balance is.”

The district’s external auditors have started the 2024 fiscal year audit, according to the district’s controller, Aaron Gilbert, and the final audit report will be presented at the December school board meeting.

The district’s general fund balance functions as its reserves, for emergencies or unplanned expenses. The district also uses the fund balance to pay its expenses in months when expenses exceed revenue. Most of the district’s revenue is received at the beginning and at the end of the school year, while its expenses are typically consistent month to month.

The school board requires the district to maintain an unassigned general fund balance of 8% of its budgeted operating expenses, or about $60 million, in its unassigned general fund balance.

The district’s general fund balance has not dipped below $100 million since the 2018-19 school year when it was $75 million. The fund balance was about $91 million at the end of June, and the district’s budget shows a gap of $80 million between revenue and expenses.

At the finance committee meeting on Tuesday, Emerick asked, “What is our fund balance projected to look like at the end of this fiscal year, and at what point in time might we have to borrow to pay our monthly operating expenses?”

Diop did not provide a specific figure.

“We are at 8% right now,” Diop replied.

When Emerick asked Diop how the district knows the fund balance is at 8% when audit numbers won’t be available until December, Diop responded, “Let the auditors do their work, and when we come in December, the auditors will present the audit to you, and they would let you know what the fund balance is.”

The bulked up general fund balance was supposed to provide the district with a “bridge” to a lower cost operating model once a school transformation plan has been approved and implemented. The district has not yet developed a school transformation plan.

Any plan would need to be approved by the school board the fall before it is implemented to provide the district and community time to prepare for changes.

Status of the district's use of federal pandemic aid

Finance committee chair Abdul Abdi asked at the finance committee meeting if the district would have any unspent federal pandemic aid funds when the deadline for spending those funds expires on Sept. 30. A recent newsletter from Edunomics Lab listed Minneapolis Public Schools as one of the districts that might have to forfeit unspent ESSER funds.

“We do have some ESSER dollars that were left,” Diop said.“And one thing that I can guarantee you is that by September 30 all those dollars would be consumed, because we are looking to see what transactions we can go back and use ESSER dollars.”

The district's job vacancy rate is lower than anticipated

The district’s current job vacancy rate is 4%, as reported by Diop on Tuesday. The board approved its budget in June that assumed 4.75% of positions would be vacant this school year, reducing the district’s expenses by $24 million in order to balance its budget. Diop said that the district would be able to make up any difference if the vacancy rate continues to run below the budgeted amount. Emerick asked for additional information on how the district will make up that difference for the October finance committee meeting.

In attendance at the meeting Tuesday evening were Board Treasurer and Finance Committee Chair Abdul Abdi, Director Joyner Emerick, Board Chair Collin Beachy, Board Vice Chair Kim Ellison, Senior Finance Officer Ibrahima Diop and Superintendent Lisa Sayles-Adams. Director Ira Jourdain was absent. Finance committee meetings are open to the public but are not recorded or live-streamed. The finance committee typically meets on the third Tuesday of the month at 5 p.m. at Davis Center.