Mpls, St. Paul school leaders worry Legislature will target their funding

Leaders of the Minneapolis and St. Paul school districts are wondering how they'll fare with Republicans set to control the Legislature next year.

GOP lawmakers say it's time to review some funding formulas, especially those that result in more money for the state's two largest cities.

Minneapolis school leaders learned last week their budget deficit for next year is larger than previously thought, and could reach $45 million.

But school board member Tom Madden thinks it could be even larger yet, and the upcoming shift to Republican control is one reason.

"Many people elected were very clear about funding for schools in Minneapolis and St. Paul, and how they believe it's unfair for their district," said Madden. "So I absolutely expect, based on what they said, that Minneapolis and St. Paul are under a pretty big threat of all sorts of funding cuts."

It's easy to see where Madden's concern comes from. The current House speaker and Senate majority leader live in Minneapolis. School officials say that protected the cities from past efforts to cut. And with Democrats in control, every state representative and senator from Minneapolis and St. Paul were in the majority. Come January, none will be.

Republicans, though, say it's not fair to characterize them as gunning for the two cities. Sen. David Hann, R-Eden Prairie, says there's a larger issue here -- Minnesota's complex education funding system needs a thorough review.

"And it's no longer satisfactory to say, 'We're spending more money this year than last year, therefore we're doing a good job,'" said Hann.

While all Minnesota school leaders are worried there might be across-the-board cuts next year, it is possible to cut funding in a way that affects Minneapolis and St. Paul a lot more.

That's because state school funding doesn't come from just one pot of money; there are several, and each pot has a different formula to determine payouts. That's why per-pupil funding varies from district to district.

It's those smaller pots of money, called "categoricals" in government parlance, that could be targets, according to Democrats.

"We certainly have seen amendments openly on the floor of the House in the last few years that would suggest that could be a strategy," said Rep. Carlos Mariani, DFL-St. Paul, who will soon relinquish the chairmanship of a key education committee in the House. "I am a little worried about it."

That said, Mariani says categoricals are "drops in the bucket" compared to the size of the state's entire budget deficit. That deficit stands at $5.8 billion, though a new budget forecast next month will revise that figure.

"When the only way we're going to get money is by taking it from someone else, I think there's a knot in our stomach."

One of those categorical pots of money is called compensatory revenue, which is meant to provide extra funding to districts with students in poverty. Minneapolis and St. Paul get tens of millions more compensatory money than any other district.

Rep. Pat Garofalo, R-Farmington, agrees schools should get more to educate poor children. But he says the compensatory formula has a quirk that causes an explosion in money for just Minneapolis and St. Paul.

He wants to know why, for example, Minneapolis has twice as many eligible poor students as Anoka-Hennepin, but gets about six times as much compensatory money.

"I've looked at other school financing mechanisms across the country, and nobody else does that," said Garofalo. "Someone needs to provide some data to justify these decisions, and the data doesn't justify the goofy quirks in education finance law we have right now."

St. Paul is getting $67 million in compensatory funding this year; Minneapolis will receive $52.5 million; Osseo, in third place, will get $10.6 million. St. Paul and Minneapolis's share combined represents about 29 percent of the entire $414 million compensatory budget for 2010-11.

The reason compensatory money jumps is the formula doesn't just account for the number of district students living in poverty, it also factors in the concentration of those kids in an area. The higher the concentration, the more money a district gets.

For example, Folwell Middle School in Minneapolis and Lake Marion Elementary in Lakeville both have 87 students on free lunch, one of the main statistics used in the compensatory formula. But Folwell is getting $244,491 in compensatory funding this year, while Lake Marion will get just $58,014.

The reason? Folwell's 87 students on free lunch is out of a total 117 students in the school, while Lake Marion has 573 students. So Folwell has a higher concentration of poverty.

Garofalo also wants to study another pot of money called integration revenue. A Legislative Auditor's report five years ago noted state law doesn't clearly define just what that money should be used for. Minneapolis, St. Paul and Duluth get more than half of the entire share of integration money.

Garofalo also questions why state law, and not a formula, sets the levels of integration funding. St. Paul gets $445 per pupil; Minneapolis gets $480; and Duluth gets $206. But the rest of the districts that qualify for integration aid can only get a maximum of $129 per pupil.

"The statute books are littered with a tiered system, where those in a place of political power have been able to extract resources from the state coffers -- not because of need, not because of merit, but just because of political power," said Garofalo.

Anoka-Hennepin superintendent Dennis Carlson says his district uses its integration funding to operate magnet schools. He says there's nothing wrong with scrutinizing those pots of money, but he's worried about lawmakers pitting districts against each other in a competition for scarce funds.

"When the only way we're going to get money is by taking it from someone else, I think there's a knot in our stomach," he said. "It's not something that sits well with superintendents in this state."

Carlson also notes changing demographics will make it harder to target the two big cities. More Minnesota students than ever are in poverty, for example, which means changing formulas could affect even more districts.

That sentiment is echoed by Elona Street-Stewart, chair of the St. Paul School Board.

"I hope that this legislative body next session realizes you can't polarize the schools anymore. You can't continue to separeate us from urban or rural. We've got common issues around quality education in this state."

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