Schools across Minnesota face ‘reckoning’ as they struggle to close budget gaps

Minnesota schools are dealing with budget shortfalls and staffing cuts as they face inflation, uncertainty from possible federal cuts and the rising costs of recent state legislation.

A recent survey of more than 50 metro-area school districts showed the vast majority expect budget shortfalls for the upcoming academic year. Some rural and suburban districts are also struggling to close gaps.

School boards must have their district budgets approved and in place by the end of June, so their window to act is closing.

While overall money issues are less severe compared to those predicted by districts last year, they’re still likely to lead to layoffs, said Scott Croonquist, executive director of the Association of Metropolitan School Districts. 

Inflation and ongoing costs from state laws passed in 2023 are the main reasons districts are struggling with budgets now, he added.

“That really leaves school districts with the choice of cutting programs and cutting staff, frankly,” he said. And 80 percent of the school district's budget is really tied up in personnel, and so ultimately it just means that we're going to have to have fewer people if we continue to face these kinds of shortfalls.” 

A Minnesota House bill to offer a 2.7 percent increase to the state’s per-pupil funding formula, coupled with $40 million in spending to help support the state’s Read Act would help reduce metro-area districts’ $280 million collective shortfall projected for next year, but wouldn’t “significantly reduce the shortfalls that they're facing,” Croonquist said.

Early childhood, other programs targeted

Minnesota’s largest districts are facing some of the most difficult decisions as they decide what to keep and what to cut. 

Minneapolis Public Schools, the state’s fourth largest district, faces the largest budget deficit, a $75 million gap for next school year.

District leaders have signaled already that school nutrition and special education will be affected. Some layoff notices have already been sent, but the full scope of cuts has not yet been shared by the district.

“A large share of reductions are happening at the administrative level and within department allocations,” Lisa Sayles-Adams, superintendent of the Minneapolis schools, wrote in a letter released ahead of a recent budget draft. “While, like most school districts, we are reckoning with what it means to have fewer resources, it is important to note that there weren’t enough resources to begin with.”

St. Paul Public Schools anticipates a $51.1 million shortfall that is likely to affect programs that operate outside of the classroom. The district’s board has agreed to offset the revenue drop with $34.9 million in reserve funds, but that leaves $16.2 million in budget cuts and new allocations.

The district has suggested reductions in alternative learning, school support, and specialized services. 

On April 29, the board held a special meeting to hear from the community on the plans to reduce the shortfall after outcry from parents and educators. In the future, the board is changing its budget process to allow for earlier community input.

“From now on the earlier on in the process, it’s easier to take feedback and make changes. And not to say that we can’t receive feedback and realize that something happening now is incorrect and needs adjustment but the closer you get to June the harder it is to make that shift,” said St. Paul school board member Uriah Ward.

One program community members feel was overlooked in the budget process was Early Childhood Family Education, which provides families with parenting and education resources. If the current budget is approved, the program would shrink from six sites to four. 

Especially in St. Paul, Early Childhood Family Education serves a wide range of families from diverse backgrounds.

Community members shared how ECFE, and other programs impacted their lives and that to reduce funding for them directly goes against the school district's priorities to “sustain funding for early education” and “increase a sense of belonging and safety in our school communities.”

The board said it will take the public comment into consideration before finalizing the budget decisions next month.

In Anoka-Hennepin, Minnesota’s largest school district, leaders are expecting a shortfall of $14 million to $19 million, depending on how state funding is ultimately worked out at the Legislature. 

“We are facing critical funding challenges and we have already made extensive administrative cuts, program cuts and staff layoffs,” Cory McIntyre, the Anoka-Hennepin superintendent, told the Association of Metropolitan School Districts.

In Bloomington, where district leaders are facing a $4 million shortfall, there are plans to cut nearly 10 full time positions, dip into the fund balance and repurpose an elementary school to create a district-wide early childhood center. 

Facing a $21 million shortfall, the Robbinsdale school district has said it is eliminating close to 200 staff positions. 

Teri Staloch, the Robbinsdale superintendent, wrote in a community email that the district would have to eliminate an education service center and school-based staff positions, including an assistant principal.

Robbinsdale leaders say enrollment declines are part of the reason budget reductions are necessary. They also say school closures will likely be necessary in coming years. 

Rural districts also face a financial squeeze

Rural districts are also facing money issues with inflation delivering new problems, said  Darrin Strosahl, executive director of the Minnesota Rural Education Association. 

“The inflation gap has caused the operating levy to now be essential. This is where the real hurt is put on rural districts -- it is so much harder to pass an operating levy in a rural community because it is not the same question as it is in a metro district,” Strosahl said. 

Operating levies that pay for supplies, staff salaries and other daily school operating costs are tied to property taxes and can be enacted only with voter approval. But they tend to take a bigger bite out of household incomes in rural communities.

“It is like paying for a cup of coffee in a month in the metro area vs. buying a dozen eggs each week in the rural area to generate an equal amount of revenue,” Strosahl said.

That’s how it’s played out in the Grand Rapids Area Schools. District leaders over five consecutive years made budget cuts totaling close to $10 million and reduced staff by about 80 people. This year they faced a deficit of nearly $1 million and, in addition to creating an online education model to bring in revenue, have had to cut several more positions.

Board members in the northern Minnesota district have suggested reducing the school week to four days to bring down costs. “I think that will be something we need to look at this upcoming year,” said Matt Grose, the superintendent. “I don’t think for our district there’s a ton of savings there, but, at the same time, if there are any savings there, we have to look at it.”

District leaders say inflation, new state education requirements and the failure to pass a recent operating referendum in 2023 are among the reasons they are having to make cuts.

“We've had to make really, really hard choices,” Grose said. “We've been taking care of the money that we've been given. It's just that the money that we've been given is not enough to to keep pace with what it is that we actually need to do … or what we want to do for our kids.”

‘Stuff changing every day’

Though the majority of funding for Minnesota school districts comes from state and local governments, cuts from the federal government have some departments on edge. 

For example, the Trump administration is withholding almost $20 million in funding for Head Start, the state's public preschool and child care program. This also comes after closing the Midwest’s Head Start headquarters. Kraig Gratke, the state’s Head Start director, said it left the program in the lurch.

“We're dealing with stuff changing every day, but not getting real answers,” Gratke said. And that, I think that's the biggest problem, is not having the communication saying this is the direction we're going.”

Minnesota districts and state education leaders have expressed concern over federal threats to withhold funding. 

The feds provide around 10 percent of Minnesota school district funding, including in Grand Rapids where the money’s targeted “to helping some of our most needy kids,” Grose said. 

When districts start hearing of “reductions to programs that support students with special needs, programs that support students in poverty, programs that support students who have English as a second language, that's really concerning, because those needs will not go away,” Grose said. “Those needs will still be here. Those children will still be here.”

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