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Solvejg Wastvedt

Minneapolis schools uncover $17M budget deficit

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Minneapolis Public Schools are facing an unexpected budget deficit of nearly $17 million for the current school year.

The problem came from budgeting errors, district officials say, but they're confident new financial practices mean it won't happen again.

School board chair Jenny Arneson says the error came partly from accounting that wasn't specific enough. However, the district's new chief financial officer Ibrahima Diop has fixed that problem, Arneson said.

"Just as it's important to budget down to the penny in your household budget, it's not really different in a large institution," Arneson said. "You need to be able to balance down to the penny and know exactly where every dollar is going. And that is our CFO's philosophy."

School officials say they failed to account for retirement plan contributions and teacher salary increases, and they underestimated some other expenses in the district budget.

To cover the shortfall, Minneapolis schools plan to move money from an investment fund so classrooms shouldn't be affected. The $17 million is about two percent of the district's annual budget.

Finance director Tariro Chapinduka says the district will make it a priority to distribute weekly budget updates, which had not been happening consistently.

"It was part of our need to be transparent instead of being reactive, which I think probably has been the case previously," Chapinduka said. "If there's any unbudgeted resources, we make the board aware of it."

Minneapolis schools aren't strangers to budget deficits. The district faced an unplanned shortfall last year as well.

A 2015 district audit found that officials may not have been keeping board members up-to-date about financial issues. Arneson says she doesn't expect a repeat next year.

"Our auditors pointed out the budget vulnerabilities earlier this year and so we made some immediate change based on that," she said. "So I am confident that this won't happen again in the future."

The district projects a balanced budget for next year. That's a contrast to several other Minnesota districts, including St. Paul which faces a $15.1 million shortfall.