Informative Press Release on K-12 Finance and Policy from my State Rep
State Representative Jim Davnie
215 State Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-0173
For Immediate Release
For more information contact: Posted: 7/28/2011
HOUSE BRIEFS
K-12 Finance and Policy
Since WWII Minnesota has built a strong quality of life, strong economy, and higher than national average wages by investing in education, infrastructure, and our citizens. Over the last ten years we have consistently under-invested in those areas. The recent government shutdown was only resolved when Governor Dayton agreed to a GOP proposal to hold back 40% of school funding each year.
While the recently passed K-12 education bill increases school funding $195 million over the next two years, it comes with a significant cost to schools. The state will now hold back 40% of the money owed schools this year to balance its own books, paying the districts a year late. School payment “shifts,” hurt school districts and charter schools by forcing them to pay interest on money that they’ll have to borrow to cover state aid that doesn’t arrive when promised. For the Minneapolis Public Schools this shift will result in an estimated $35 million reduction this coming fiscal year alone.
No other state has enacted such a drastic school payment holdback. California appears to be our only “rival” in this regard. That state is delaying about $7 billion in school payments – which amounts to a 19% school funding holdback, only half of the percentage that Minnesota is withholding from our school children.
Making matters even more challenging for our schools, we learned in early July that Fitch Rating downgraded Minnesota’s bond rating from AAA to AA+ because of several budget cycles in which the state did not address its structural deficit. Fitch specifically cited Minnesota's repeated use of school shifts when lowering our rating, as did Moody's when they downgraded us in 2003 for the same reason.
Shifts can be particularly burdensome for charter schools, which have not had the same access as traditional school districts have had to short-term loans at favorable rates. Several elements in the bill however will blunt some of the impact of this shift on charters. Interest income from the Permanent School Fund will now be distributed to both district and charter schools instead of just to district schools, yielding charters an additional $15 per student next year and $27 the year following. In addition, charter schools will receive accelerated state aid payments, receiving 90% of their revenues from July through February. They will then receive no payments from March through June. They will also get most of their “clean-up” payment in July. This is expected to reduce their borrowing needs and related costs.
In other aspects the bill sunsets the integration aid program after the next biennium. The bill directs the creation of a taskforce to develop a replacement program repurposing that funding. The bill relaxes state expectations that all students be reading on grade level by second grade changing that expectation to third grade. It directs school districts to develop literacy plans to assure that students achieve this reading goal. Starting in 2013 districts will receive “literacy aid” based on the number of 3rd grade students meeting or exceeding proficiency goals on the MCA-II tests.
In a sharp departure from traditional funding policy that focused on funding students the bill creates a “small school aid” providing for additional funding for school districts with less than 1000 students.
The bill also directs the creation of a taskforce to develop an annual principal evaluation system. Additionally school boards and local unions are directed to develop a new teacher evaluation system. That system includes a 3 year evaluation cycle and the use of statewide tests for 35% of the teacher’s performance evaluation if there is an applicable statewide test.
The bill repeals the January 15 teacher contract settlement deadline. It also waives the requirement that school districts dedicate 2% of their revenue for use as staff development funding.
Curiously, although there was much discussion of the value and importance of early childhood education the bill does not include a provision to continue the Parent Aware rating system of child care. While that rating system doesn’t continue $2 million each year is dedicated to scholarships for low income families to access for high quality child care.
This outcome did not need to happen. Since the beginning of the year, no one – whether Democrat or Republican - has disputed that significant budget cuts are needed and would happen. The question was whether to address a portion of the deficit with fair and honest revenue, or to continue relying on accounting shifts, gimmicks and borrowing. I believe we need a balanced solution that solves the state’s structural deficit and sets Minnesota’s economy on a steady economic path for our future – including fair and adequate funding of our schools.
We undoubtedly will be revisiting the deficit issue in 2013 and possibly beyond if we don’t get a handle on Minnesota’s ongoing deficit problems. As legislator, my priority continues to be working to build a prosperous state where everyone has the opportunity to succeed. We need to face our challenges head on, spread the burdens fairly, invest in a world class education system, and put the interests of middle-class Minnesotans first.