The Minneapolis Public Schools board of education finance committee met on April 30 as part of its ongoing discussions about the district’s budget for next school year. The district must close a budget gap of more than $110 million because of the ending of federal pandemic aid, costs increasing faster than funding, and the ongoing underfunding of mandated services like special education and English Learner services. 

The tentative contract agreements reached between the district and its teachers and educational support professionals unions will add to the budget gap, but the district has not shared details as to how much. 

The finance committee includes school board Chair Colin Beachy, Vice Chair Kim Ellison, Treasurer Abdul Abdi, Directors Joyner Emerick and Ira Jourdain, Superintendent Dr. Lisa Sayles-Adams and Senior Officer of Finance and Operations Ibrahima Diop.

Beachy announced  the board’s first reading of the budget will be May 28, a week later than planned. Beachy said this gives the district additional time to complete contract negotiations and to modify the budget proposal to account to the increased costs of new labor contracts. 

The school board is still planning to vote on a final budget resolution on June 18. By statute, the board must approve a balanced budget for the next fiscal year before it begins on July 1.

Diop told the committee that, as expected, the district will need to reopen school and department budgets to reflect the additional costs of the new teacher contract. The district also reached a tentative agreement with educational support professionals two days after the finance committee meeting. If Minneapolis Federation of Teachers members approve the tentative agreements when they vote May 8-10, the board will then need to vote to approve the contracts.

Cost of Restoring Proposed Cuts to instrumental music, magnet coordinators and assistant principals

Restoring fifth grade instrumental music for all, school-based magnet coordinators and eight elementary school assistant principal positions would cost $3.5 million, according to Diop. The committee requested this information at its previous meeting on April 17. The estimate does not include the cost of the tentative contract agreements for teachers and educational support professionals.

Diop also provided the estimated cost to restore each program separately. Restoring fifth grade instrumental music for all students would cost $1.3 million next year. Moving the eight magnet coordinator positions back to the magnet schools would cost about $800,000, for which the district could use its State achievement and integration funds, instead of general funds, to pay for these positions. 

Maintaining the eight assistant principal positions from schools predominantly on the Northside would cost $1.4 million. 

At the meeting Senior Officer of Schools Shawn Harris-Berry suggested the district could lower the enrollment level at which the district funds an assistant principal from 500 students, to 250 for “previously identified high priority schools.” This would restore funding for the positions to Lucy Laney, Nellie Stone Johnson and Jenny Lind elementary schools for assistant principals, Harris-Berry said. Under this scenario, Cityview, Hmong International Academy, Hall STEM Magnet, Anishinabe Academy and Bethune Arts Magnet elementary schools would not have their assistant principal funding restored. 

Harris-Berry said that the district had only heard from Lucy Laney, Nellie Stone Johnson and Jenny Lind elementary schools about the importance of restoring the funding for their assistant principals. She said that some of the assistant principals may have already accepted other positions for next year, and may not return even if offered their position. . 

Harris-Berry also proposed providing the three schools with an administrative Teacher on Special Assignment, or TOSA, with an extended contract. The TOSA would be able to assist the principals with administrative tasks at the schools but could not replace all of the current responsibilities of an assistant principal.

Emerick made note of a comment from Director Sharon El-Amin, who represents District 2 which includes North Minneapolis, from the April 23 committee of the whole meeting. El-Amin asked that the principals at the schools be consulted about what was most needed at their schools. 

“I would actually really love to hear from the principals most impacted before I make my final decision,” Emerick said.

Harris-Berry did not say whether principals had been consulted about potentially  restoring funding for assistant principals.

Annual Capital Plan for Facilities Upgrades and Maintenance

Curt Hartog, executive director of capital planning, presented a one-year, three-year and ten-year capital plan to the committee. The board must approve a capital plan annually, and board policy requires the board to also review the longer term capital plans each year.

The capital plan for the 2024-25 school year is the last year of the five-year capital plan that started as part of the district’s comprehensive district design, otherwise known as the CDD. The district will complete the final projects at North High School, which include remodeling classrooms, the dining room and the entrance. Changes to the Career and Technical Education (CTE) facilities at Roosevelt and Edison High School will be started this year. These high school projects were all part of the CDD which centralized CTE programs.

Sullivan STEAM Magnet School and Anishinabe Academy will have improvements made to their classrooms, and a new entrance will be added to Las Estrellas Spanish Immersion Magnet School. Ella Baker Global Studies and Humanities Magnet School will have its lunchroom remodeled. 

Justice Page Middle School will have its lunchroom and gym upgraded. Hartog said that this project was prioritized during the CDD over adding a full service kitchen at Olson Middle School. He said that Culinary and Wellness staff believed it would be easier to increase staffing at Justice Page Middle School to support an expanded kitchen. And, because Justice Page has a larger student enrollment, the project would impact more students than the project at Olson Middle School. 

Olson is scheduled to have a full service kitchen added the following school year. Currently Olson is one of the district schools that does not prepare meals from scratch on-site, but serves meals prepared at the district’s central kitchen.

According to Hartog, the district’s buildings would cost $3-4 billion to fully replace. Best practice is to spend 2% of the replacement cost each year on building maintenance, which Hartog says is equivalent to replacing a building every 50 years. Minneapolis Public Schools currently spends just $30-40 million per year on building maintenance, which is half of the $80 million per year Hartog says the district should spend.

Funds for Capital Projects are Governed by Board Policies

The district’s capital funds are limited by board policy 3290. The board policy has two parts, the first requires the board to limit its debt service payments to 20% of its operating expenses in the prior year. The second requires the board to pay back at least 70% of its debt in ten years or less. The State limits on how much the district can levy local property tax payers for its long-term facilities maintenance funds.

When interest rates are higher, this increases the cost of the debt service, which limits the amount the district can borrow under the board policies. Borrowing costs are also impacted by the district’s bond rating, which is currently AA, according to Diop. The bond rating is linked to the financial health of the district, in particular maintaining its unassigned general fund balance.

The current bond rating allows the district to sell its bonds at a premium, Diop explained to the committee. This means that if the district needs to raise $100 million of capital funds, it might only need to sell $90 million worth of bonds. The bond buyers, who are usually large financial institutions, pay the district the face value of the bonds, which in this example is $90 million, plus a premium, which in this example would be an additional $10 million. The district then only has to pay interest on the $90 million of bonds, not on the full $100 million.

Board members have signaled that part of the school transformation process will include capital improvements to district schools that are not closed. Thus, maintaining the district’s bond rating and capacity to borrow are important for enacting that plan once it is developed.

March Monthly Financial Statements

At the meeting, the board also heard about the district’s overall financial picture in March. 

The district general fund balance was $59 million at the end of March, down from $143 million at the beginning of the fiscal year on July 1, 2023, according to the financial statements shared by Aaron Gilbert, the district’s controller. March is typically the month where the district’s fund balance is at its lowest for the year. District revenue is received unevenly through the school year, while expenses are consistent, which means the district must use its cash reserves to cover its expenses while it waits for State and local funding payments. The district expects to end the year in compliance with the board’s minimum unassigned fund balance policy of 8% of operating expenses, according to Gilbert. 

The food service fund remains in deficit, reaching -$3.8 million at the end of March. Gilbert said there was a delay in State universal meal reimbursement for breakfasts which caused the significant increase in the fund deficit in March. The food service fund cannot end the fiscal year in a deficit, so the board will need to approve a resolution at some point to transfer funds from the general fund to the food service fund to cover the deficit.

The district’s spending on purchased services has increased $10 million as of March 31 this year compared to the same time last year. Gilbert said that $8 million of the increase is from the increased cost of transportation services this year, and the other $2 million is from an increase in the purchase of professional development services.

The scheduled finance committee meeting for May 7 has been canceled, according to the district website.. The next finance committee meeting will be on May 21 at Davis Center. Finance committee meetings are not live streamed or recorded, but the meetings are open to the public attending in-person. The full school board will meet on May 14 for its regular business meeting, which includes time for public comments.