The finance committee of the Minneapolis Public Schools board of education will see an updated budget proposal for the 2024-25 school year on May 21. The proposal will include the cost of the new union contracts with the district’s teachers and education support professionals, and restoration of funding for the fifth grade instrumental music program and three elementary school assistant principals. This meeting will be the first time the public learns the expected budget gap for next school year.

The school board approved the new union contracts with the Minneapolis Federation of Teachers for educators, adult educators and educational support professionals at its May 14 meeting. The district estimates the contracts will cost an additional $68 million over the two years from July 1, 2023 through June 30, 2025.

The new budget proposal will also factor in changes to the school calendar. The board voted on May 14 to lengthen the school day and shorten the school calendar next year, changes which carry financial costs.

The new union contracts will increase pay for teachers by 4% this school year, retroactive to July 1, 2023, and next year by 5%. Educational support professionals will receive a raise of 4% for the current year retroactive to July 1, 2023, and next year by 6%. Some education support professionals will receive additional pay for years of service.

The administration told the finance committee in late April that restoring funding for the fifth grade instrumental music program would cost $1.3 million. That estimate does not include the cost of the new teacher contract. .

Restoring the three assistant principal positions is estimated to cost $600,000.

The finance committee will hear the updated budget proposal on May 21 at 5 p.m. at the Davis Center. Finance committee meetings are open to the public in-person but they are not recorded or streamed.

The district projected a $110 million budget gap before signing the new contracts and restoring funding for the instrumental music program and three assistant principals. Tuesday's meeting will be the first time the public will see what the full budget gap will be next year, and how the district will close that gap.

The district originally planned to spend down nearly all of its assigned fund balance, $55 million, next year to avoid further cuts in the first budget it proposed in March. The one-time reserve funds will not be available to the district in subsequent school years. And it is not clear how the district will balance its budget without these one-time funds in future years.

Were the board to decide to spend the district’s unassigned fund balance, which functions as the district’s emergency reserves, it would risk lowering the district’s credit rating, and placing the district in statutory operating debt. A lower credit rating would increase the cost of borrowing funds for the district.

The district will ask voters to approve a $20 million increase in the technology levy this November, which would increase revenue in the 2025-26 school year. Under current State law, the district has maximized its property tax levy for its operating expenses, and cannot raise any additional funding by increasing the operating levy.

An update on the district’s “school transformation” plan

The school board in December directed then-interim superintendent Rochelle Cox to develop a plan for “school transformation” that would include closing and consolidating schools and putting the district on a sustainable fiscal path.

Since approving the resolution, the board has not discussed school transformation in public meetings. There is no indication the board will take further action on closures or consolidation before it recesses for the summer after its June meeting.

The board was scheduled to receive a facilities plan from the district’s internal Strategic Operating Plan Workgroup in April, according to a document shared with the board’s finance committee last September. In March, Minneapolis Schools Voices asked the district for an update on the timeline of that plan. The district’s communications department responded that although a statement has been drafted, it has not been approved for release.

Last September, Minneapolis Schools Voices submitted a records request related to the school transformation which the district has not responded to yet.

The timeline for enacting changes before the 2025-26 school year is about six months based on public remarks made last October by Cox. The district’s most recent financial projections anticipate that without significant reductions in its costs before the 2025-26 school year, the district will enter statutory operating debt. In statutory operating debt a district must borrow money in order to pay its operating costs.

The new funding appropriated by the State last year was not enough to eliminate the district’s structural deficit. In future years, State funding will increase between 2-3% per year, depending on the inflation rate. District costs have been increasing faster than inflation for many years.