Thursday, April 30, 2009

Live from the Conference Committee. We're into our second evening of E-12 conference committee proceedings. The action (let me re-phrase, inaction) to this point has centered around the discussion of the provisions in both bills, highlighting both differences and similarities that exist between the House and Senate versions of the bill.

Last night was dedicated to the larger questions before the conference committee in terms of funding, particularly the House's flat funding and the Senate's 3.5% per year funding reduction. Special education, both in terms of funding and policy, was also discussed last evening.

Tonight, the remainder of the bill will receive its initial review by the conference committee. The portion of the bill dealing with early childhood programs were just presented and Representative Mary Murphy (DFL-Hermantown) just finished outlining her committee's position on libraries. Representative Murphy is not a member of the conference committee, but was brought in to provide insight on the House's approach to the library question, especially as it relates to maintenance-of-effort.

One of the big changes I have witnessed in my legislative career is the willingness of conference committees to bring in outside testimony. In the old days (when Alexander Ramsey and I used to sit around chewing plug tobacco and admiring each other's high-button shoes), conference committees rarely (and I mean really rarely) would allow participation of legislators who were not members of the conference committee to speak before the conference committee.

Well, back to the action. The discussion of Article 2--the education excellence article that contains a number of educational quality improvement proposals--is a bit slow in the coming, as there was an extended discussion of the consolidated levy. The consolidated levy, as many of you know, is a long-standing proposal that takes three levy categories--operating capital, equity, and transition--and combines them into a single levy category with a statewide levy percentage based on adjusted net tax capacity. This program does provide some measure of tax equity (although it's not even) by shifting effort away from most low property wealth districts. Because it mimics the general education levy, there is considerable opposition, mostly from the business community, to this measure. Stay tuned.

We're on to Article 2 and now discussing the differing shared services proposals in each bill. Senator Terry Bonoff (D-Minnetonka) is now providing insight and defending the Senate's proposal.

Concurrent enrollment between high school and post-secondary institutions was cut in the Governor's bill and both the Senate and House oppose that cut, the House by broadening the state requirements for the Advanced Placement and International Baccalaureate programs to include concurrent enrollment and the Senate through a $1 million per year rider. The House pointed out the Senate's position would be vulnerable to a line-item veto. The Senate funded their position, if not directly, through a reductions in the base level appropriations for the Advanced Placement and International Baccalaureate programs. There is an interest on both sides to maintain the option of concurrent enrollment, so look for negotiations to come to an agreement here.

Now, the 11th grade high-stakes tests are under the microscope. There are similar alternatives set out in both bills pertaining to the 11th grade math test and the House bill also allows for the awarding of a diploma under certain circumstances if a student has failed both the math and reading portions of the test. There is ample interest in reaching a compromise here, but the third party--the Governor--is now providing his input through the person of Minnesota Department of Education Commissioner Alice Seagren.

Commissioner Seagren is now pointing out her concerns (not only on testing) that were transmitted to the conference committee by letter. Among the Commissioner's 31 separate complaints:
  1. Senate position on providing more resources for QComp in St. Cloud. Department has revoked St. Cloud's participation in the program for lack of progress toward a satisfactory alternative compensation model. The Senate provides St. Cloud with one more year of funding.
  2. The Commissioner believes that language in the bill is not sufficient to ensure that state standards are aligned with federal expectations and would endanger Minnesota's eligibility for federal grants.
  3. A number of items related to testing that the Department deems as unclear.
  4. Proposed deadlines for applying for the QComp program the Department believes are detrimental to districts considering participating. Further, there are provisions in the bill that the Department believes allows participating districts to deviate from the state's QComp goals.
  5. The Department disagrees with the Senate's proposal to put unappropriated QComp funds into a grant program to help small rural districts prepare QComp proposals. MDE believes this would discriminate against mid-size districts seeking to join the QComp program.
  6. MDE wants to include the YMCA and Volunteers for America in the list of possible charter school sponsors. These groups, in MDE's view, are only vaguely aligned with religious organizations, which are prohibited from becoming sponsors because they are non-sectarian. Department wants to narrow limitation to "houses of worship" and allow sectarian groups to sponsor charter schools.
  7. Lack of clear direction on charter schools creating non-profit building corporations.
  8. Problems with the Deaf and Hearing Impaired Council created in the Senate bill, as it would have costs to MDE that are not reimbursed by the bill.
  9. MDE believes the Senate's quality rating system for early childhood programs is too ambitious and cannot succeed in the absence of a statewide quality rating tool for evaluation purposes.
  10. MDE does not support the increase in the number of signatures necessary to put a referendum revocation on a ballot.
  11. Insufficient resources for charter school authorizers in House bill.
  12. House bill takes curriculum evaluation and assessment cycles out of synchronization according to MDE. I believe Commissioner Seagren is referring to the House bill's delay of the new science standards by one year.
  13. MDE wants to keep private schools offering special education services to remain "full service." Language in the House bill, arising from the task force led by Representative Jerry Newton, only requires that federal special education dollars be passed through to private schools serving special education students and that state revenue does not have to be passed through to them.
And that's leaving some things out. Needless to say, the Governor got short shrift from the Legislature this year, but that's not entirely unexpected. Several of the House and Senate provisions relating to charter schools and QComp were gleaned from Legislative Auditor's reports on those two areas, so it's not like the Legislature is going far afield in putting together its responses to those programs. Further, the old saying is "the Governor proposes and the Legislature disposes" and in an active democracy, that's how it should work (regardless of which party controls what).

Back to the bill discussion. QComp is back on the docket with both bodies looking to do something to help smaller districts seriously consider QComp as an option. Many smaller districts simply don't have the staff size to develop and implement a meaningful the evaluation system that is a mandatory part of Qcomp.

The beat goes on. . . . .we continue to slog through the bill. Article 2 has a ton of stuff in it. Right now, we're immersed in the new charter school regulations carried by Representative Linda Slocum (DFL-Minneapolis) and Senator Kathy Saltzman (DFL-Woodbury). One particular difference between the bills is the presence in the Senate of the 36-month prohibition on the opening of a charter school within a one-mile radius of a building that has closed or a district that has either consolidated or dissolved. The Senate has this prohibition, the House does not. One thing to remember about this provision is that a local school board can waive the moratorium if it so chooses.

Another big difference between the two bills is the presence in the House bill of a re-design of the integration revenue program. There are considerable revenue swings in the House plan, but they will not take place until there is money available to hold districts losing money under the changes to be "held harmless."

Well, that's it for Article 2. Now we are going to move on to see if we can adopt some of the same and similar provisions in the two bills. A number of same positions have been adopted and we're out of here for tonight. Back tomorrow at 10 AM in Room 200 of the State Office Building. Deadline is next Friday (May 7) for the conference committee to have its work completed, so in all likelihood, we are going to be here all weekend.

Monday, April 27, 2009

Late Day Update. The House and Senate continue hard at work on their versions of the Health and Human Services omnibus funding bill. This bill usually draws a lot of discussion and a lot of amendments and today is no exception. Both bodies are approaching hour number seven on this bill and who knows how long the discussion will continue.

Two education-related items were announced today. First, the E-12 conferees for the House and Senate have been named. They are (with links):


Representative Mindy Greiling (DFL-Roseville):
Representative Carlos Mariani (DFL-St. Paul):
Representative Nora Slawik (DFL-Maplewood):
Representative John Ward (DFL-Brainerd):
Representative Pat Garofalo (R-Farmington):

In related news, the conference committee will hold its first meeting tomorrow, Tuesday, April 28, starting at 4 PM in Room 200 of the State Office Building. The first meeting is used to compare the provisions in each bill by going through each bill section-by-section. In some instances, provisions where language is identical will be adopted, but there is no guarantee that will happen right out of the gate.
Surveys: Scott Croonquist from AMSD usually gathers data from his districts showing the level of cuts that will occur as a result of both bills. This year, he asked me to join him and invite SEE members to participate. Deb Griffiths e-mailed every SEE superintendent a copy of the AMSD survey to be filled out. The survery is a Word document that can be filled out and e-mailed back to me. Please do that by Wednesday, April 29, so we can present the level of cuts to the E-12 Conference Committee early in its proceedings. Thank you very much.
This Will be the Week that Was. The E-12 Funding bills have passed both bodies as have the tax bills, which puts pretty much everything of note into negotiations starting this week. Unlike other years, the negotations this year will pretty much be a mad dash, as conference committees must reach their agreements and close up their work by May 7. The resulting work of the conference committees will then be approved on the House and Senate floors before heading to the Governor, for a number of likely vetoes.

Vetoes are pretty much expected in the area of taxes and health and human services funding. The Governor has vowed to veto any tax increase and both the House and Senate tax bills contain considerable tax increases. The House bill creates a fourth-tier income tax bracket and also loads up on cigarette and liquor taxes to generate the money they seek to balance their budget plan. The House bill also contains a controversial change to the way Minnesota taxpayers' home mortgage interest is treated. The House bill eliminates the home mortgage interest deduction and replaces it with a tax credit of up to $420. This does a couple of things. First, it basically caps the amount of home mortgage interest considered for possible tax preference at $10,000. In other words, any home mortgage interest you pay in excess of $10,000 will no longer be recognized by the state of Minnesota for tax purposes under the House bill. The plus side of this approach, in the House's view, is that in changing the deduction to a credit, non-itemizers (usually those with low incomes) will be able to access a tax advantage now reserved for itemizers.

The downside of this approach is fairly clear. Politically, it requires a two-step explanation, which is almost always poison (even for the most sound policy, which I don't necessarily believe this is at all levels). Rhetoric against something usually stops at the "they took this away. . ." part of the equation, and it's often difficult to get people to stay tuned for the ". . .and they replaced it with this" follow-up phrase. That seems to be the dynamic at work here. The other problem has more of a policy angle. When you take away deductions and broaden the taxable base, the best way to deal with that is to lower marginal tax rates. That's not happening here, so people aren't seeing the "instant" trade-off. And while it's laudable to make the tax system more progressive and to target tax benefits to those at the lower end of the income spectrum, there are probably better ways to accomplish that, both politically and in a policy sense, than this. Further, SEE districts are heavily residential in nature, with many of our districts filled with young families. Because of when they purchased their house (before the collapse of the housing bubble), the home mortgage interest paid is likely to be over $10,000, making this change a drag on their household finances. It is already difficult for school districts in these areas that are growing and often filled with younger homeowners to pass referendum and debt service levies. Having these folks take a hit on their income taxes isn't going to help matters in that regard.

The Senate is more straightforward in its approach. It also creates a fourth-tier rate for high income earners, but it mainly increases--on a temporary basis--the income taxes paid by all Minnesotans. It institutes a "blinker" tax (meaning it ceases once enough money is raised) that would affect 85% of Minnesota taxpayers. When combined with the Senate's cuts to all division budgets of approximately 7 1/2%, the Senate balances both the current biennium and next biennium without using any accounting shifts, bonding against future tobacco settlements, or what they consider other budget legerdemain. Whatever one feels about their approach (and there are ample reasons not to like it), it is certainly an honest one.

I'll be back later today with further details.

Monday, April 20, 2009

House Bill Creeping Toward the Floor. The House K-12 Funding bill cleared the House Ways and Means Committee early this evening and will now head to the House floor for consideration later this week, most likely on Wednesday. Once it's off the floor, we'll be all set for conference committee, which should be extremely interesting. The House and the Governor are fairly close, with the House raising taxes more and shifting less and spending a bit more. The Governor has vowed not to raise any state taxes, which could complicate matters. The Senate position on cuts and no shifts will also cause some complications. As it gets closer to conference committee, I will be preparing a comparison summary of the major provisions in each bill and how they differ from the Governor's position.

Special Education in House and Senate Bills. One of the quiet victories, if it can be called a victory, is the decision by the Governor, House, and Senate to not reduce the special education base in their budgets this year. Instead, the appropriation levels set in the 2007 omnibus education funding bill are maintained in all the budget proposals being presented this year.

Those levels will provide an approximately $15 million increase for the 2010 fiscal year and an additional $50 million for the 2011 fiscal year for the special education basic formula. Excess cost aid is bascially flat for the next biennium. This is one bit of good news (albeit small as it won't prevent increasing cross-subsidy amounts) and an on-going recognition of the costs of special education.

House Tax Bill Unveiled. And that's about all I can tell you. There are a number of interesting provisions, but I have not had the opportunity to pore through the bill or the summary. I hope to have a chance to read it before it hits the House floor. I can point you to the
text of the bill and the summary if you are so inclined to peruse it for yourself.

Current Text of HF 2323:

Summary of HF 2323:

Spreadsheet of HF 2323:

Wednesday, April 15, 2009

House Bill Mark-Up. The House K-12 Funding Division is in the midst of discussing and amending HF 2--the House omnibus E-12 funding bill--as I write. The only major item that has been amended, in this case out of the bill, is the alternative teacher licensure piece that was opposed by Education Minnesota. The was offered by Representative Will Morgan (DFL-Burnsville) offered the amendment and it passed on a vote of 11-10.

There has been a lot of discussion on integration aid. The House bill changes some aspects of integration aid, focusing it more closely on achievement as opposed to interracial contact and althers the distribution of integration aid (although not for a few years). Representative Buesgens just offered an amendment to eliminate the program entirely, but it failed.

Representative Pat Garofalo (R-Lakeville) just offered an amendment that would remove the pre-Labor Day start allowance in the bill, but it failed on a voice vote.

This hasn't gone on as long as I thought it would. About fifteen amendments were offered and it looks like slightly less than half passed. Everything that passed was relatively non-controversial, the only exception being the removal of the alternative teacher licensure piece that was in the bill (as referenced above).

Speeches are no being given and the bill will pass, most likely on a straight party-line vote.

I'll speak in greater detail about the contents of the bill in my next entry. Live from Room 5 of the State Office Building, this is Brad signing off.

EDIT: I was wrong. Mark this one down (and the next one and the next one and the next one . . .) . The final vote on the K-12 Funding Bill in the K-12 Funding Division was not a straight party-line vote. Representative Pat Garofalo (R-Lakeville)--the lead Republican on the K-12 Funding Division--voted for the bill.

Integration Revenue. The House K-12 Funding Division had some very interesting working groups this year. Of course, there was the Shared Services Working Group and the Mandate Reduction Working Group, but perhaps the group that came up with the most rattling set of recommendations was that of the Integration Revenue Working Group headed up by Representatives Robin Brown (DFL-Moscow Township) and Jerry Newton (DFL-Coon Rapids).

Much of the working group's final product is a reflection of the Legislative Auditor's Report on Integration Revenue published in November, 2005. One of the primary issues with the Integration Revenue program as identified by the Legislative Auditor is that the program lacked focus and there was a question as to the primary purpose of the program: increased student achievement or bringing greater racial balance to school buildings by moving students within school districts and between neighboring school districts.

The Working Group's product clearly points more toward achievement than racial balancing and also suggests the integration revenue be delivered only to school districts with diversity levels at or above the state average. This would clearly redistribute integration revenue and even though the revenue distribution portion of the Working Group Report is not part of the K-12 omnibus bill, the specter of this redistribution occuring at some time in the future is clearly influencing the discussion of the issue. I will try to unearth the data run on the Working Group formula changes and distribute it to all of you.

Here is a link to the 2005 Legislative Auditor's Report on Integration Revenue:

Tuesday, April 14, 2009

Live! From the House K-12 Funding Division! It's Tuesday Afternoon! House finance whiz Greg Crowe is currently going through his monologue, otherwise known as a section-by-section explanation of the House K-12. He will soon be joined by his colleagues Tim Strom and Lisa Larson, both of House Research, to describe other portions of the bill.

What we have learned thus far (not much new as most of this has been discussed previously):

  • The aid payment shift is set at 73% current year/27% subsequent year. This is seven percentage points greater than the level proposed by the Governor. The House proposal shifts--or saves depending on your perspective--the state budget another $400 million beyond the Governor's budget.
  • The property tax shift is the same as recommended by the Governor.
  • Unlike the Senate bill, which cuts school district funding beyond loss due to inflation, the House holds funding flat for the next two years. School districts should expect to receive the same amount of per pupil revenue that they received last year.
  • Future OPEB bonding is limited with a requirement that voters approve this bonding.
  • The Swails/McFarlane version of the shared-services initiative (contains no mandate or outside consultant) is in the bill.
  • Schools are able to start school before Labor Day in the 2009-2010 and 2010-2011 school years. It has been brought up that this legislation--in single bill form--was defeated in the House Finance Committee, but it was also added to the bill that was fashioned by Representative Tilberry's through an amendment, making it part of the current bill (just think of the famous early 1970s Yes song "Roundabout" about this time of the year. It certainly helps make sense of the process.)
  • Representative Newton's (and Senator Fobbe's) special education mandate reduction bill is contained in the House omnibus bill. Representative Davnie's language on the behavior intervention rule and limiting the use of locked timeout is also contained in the special education article.
  • The project cost cap for requiring review-and-comment is raised from $500,000 to $1.4 million.
  • One-time capital expenditure shift of last year is extended for the next two years at the same amount ($51 per pupil unit).
  • Article 9 contains "The New Minnesota Miracle." It is phased in over a four-year period beginning in FY 2014.

There's a lot more here and a lot more detail to what I have written. Some general observations:

  • Big time shift! Beyond the Governor's 80%/20% suggestion and in a different galaxy than the Senate's no-shift policy. Gee, guess what we'll be talking about in conference committee?
  • Good, make that great, work in the mandate reduction area, but it could have gone further.
  • No real increases in equalization in "The New Minnesota Miracle" proposal. There haven't been to this point (although Representatives Abeler and Gardner had bills heard on the topic this year) and that is something we need to work on, if not this year, in the future, and if not in this committee, then in the tax committee (use enough commas Faulkner?). In defense of its absence, we don't know what role the referendum will play as "The New Minnesota Miracle" takes hold, but the property tax burden is woefully out of whack (to the point of being just "whack"--hey I'm down with the kids and their lingo) and that needs to be corrected as we move forward.
  • It's hard to get excited about flat funding (and believe me, I'm not excited), but this might be the best we get this year. Chilling thought.

As you can see, I've gone to a larger type size. Hope that helps.

Monday, April 13, 2009

Senate Bill (Part III). There isn't a whole lot more to say about the Senate bill. As I reported in the first segment, the bill passed on a 37-29 vote. There was an amendment offered by Senator Ray Vandeveer (R-Forest Lake) that would have changed the distribution of the cuts, but it failed on a 30-36 vote, but as in the case of the bill's final passage, there was never much doubt as to what the final results would be. Once a bill comes out of committee, significant changes in the bill are extremely rare and there was no exception in this case.

A couple positives came out of the testimony I provided to the Senate E-12 Funding Division. I had a very productive conversation with Senator Patricia Torres Ray (DFL-Minneapolis). Senator Torres Ray defended the Senate bill during the committee proceedings, but she, like many of us, is tiring of the way that the current education funding formula seems to pit sets of districts against each other. My conversation with Senator Torres Ray made all the angst of the previous week worth it.

The current K-12 funding formula is a broken mess. SEE, as part of an active coalition, invested in completing a study showing the state's education funding system is at least $1 billion short in resources of what needs to be in the system. Let me be clear, the issues of resources and distribution are separate and can be addressed apart from each other. My primary complaint with the current formula is that the general education basic amount has no connection to the real needs faced by districts and, given that fact, the differences between school districts take precedence over the experiences and cost pressures that they all share. For districts with low revenue yield from the categorical formulas, the only method to generate additional revenue to meet the revenue gap resulting from an inadequate basic formula is to attempt to pass voter-approved operating referenda. Given the erosion of the referendum and debt service equalization programs, low property wealth districts have less ability to pass these referenda, leaving them at the lower end of the per pupil revenue rankings. Given the demographic and geographic profiles of SEE districts and their property tax sensitivity, they will probably remain below the state average in funding (someone has to), but I don't think being below average would necessarily be that bad if the state were providing resources adequate to meet the needs of students in these districts. That simply isn't the case right now and is at the heart of my complaint.

Minnesota's current formula is extremely political (with a lower-case "p") in that it has been jimmied and contorted to funnel just enough money into just enough districts to create a viable coalition that can continue to pass education funding bills and keep the status quo relatively in place. The reason we enlisted John Myers was to show that the basic foundation beneath all school districts was crumbling and needed to be bolstered. There is a very telling quote from the Montoy v. State of Kansas decision in which the Kansas education funding system was declared unconstitutional in 2005. In affirming a district court decision, the Kansas Supreme Court wrote: "Specifically, the district court found that the financing formula was not based upon actual costs to educate children but was instead based on former spending levels and political compromise"

That sentence pretty much sums up the current situation in Minnesota. The current formula does not provide adequacy in a larger sense to any district in the state, which makes the Senate bill, more in its overall level of funding instead of its distribution, a step in the wrong direction. Hopefully, this painful exercise will galvanize the education community in seeking positive changes that will bring more revenue into the system.

The text of the Senate bill can be found at:

Saturday, April 11, 2009

Senate Bill (Part II). Now where did we leave off? That's right, the Senate E-12 Funding Division had unveiled its bill that applied significant funding cuts to school districts throughout the state. In reaction to these proposed cuts and the distribution of the cuts, I talked with several SEE area legislators and voiced my concern. Senator Amy Koch (R-Buffalo) had an amendment drafted that would have altered the way in which the cuts were distributed by putting all revenue streams into consideration for cuts. This would have implemented an across-the-board cut to all school districts of the same percentage amount in terms of state-generated formula revenue. As stated in the previous edition of the blog, fairness and equity can often be slippery and I am not going to be someone who can unequivocally state that doing it the way Senator Koch suggested is either the only or most correct way to implement the cuts, although it clearly treats districts at the bottom end of the revnue pile more fairly.

I was very pointed in my testimony on this amendment. I acknowledged that SEE was not a monolithic set of districts and that some SEE members would benefit from the manner in which the cuts in the bill were suggested, but that the Senate approach needed to be discussed both in a macro and micro sense. The first point I made is that the fact that education is being cut at all is a mistake and should be re-thought. I "get" the notion of shared sacrifice that the Senate has been promoting, but given that the Minnesota (and American) economic future is going to rely more heavily on preparing our human capital to compete successfully on a global scale, it's unwise to put education on a funding hiatus.
I then proceeded to talk about how the cuts were to be applied in the Senate bill and how districts with the lowest levels of per pupil general education revenue were going to be assuming a larger percentage cut due to the fact they receive little in terms of sub-formula revenue that is tied to the general education amount--compensatory, sparsity, equity, and transportation sparsity--and have little or no additional revenue provided through the referendum to offset these cuts.
Lastly, I talked about how Minnesota needed comprehensive funding reform that would raise the amount of revenue available for all districts, distribute that revenue so that differences in district demography and geography are recognized, and reduce reliance on the referendum. I pointed out how education funding reform has been one of SEE's top priorities over the past five years and that we, along with other organizations advocating for reform, have not had much luck getting the Senate excited about the subject.
Needless to say, the amendment and my testimony incited a spirited discussion, with proponents of the bill's language and proponents of Senator Koch's amendment sparring for about half an hour. In the end, Senator Koch withdrew her amendment, as there were some questions about technical aspects of the language and the fact that it probably would not pass.
One could ask--and it would be a reasonable question--as to why I got up and spoke sympathetically about an amendment that (1) was controversial, (2) might get people angry at me, and (3) wasn't going to pass. As for the first two points, I don't think a lobbyist has the luxury of taking a walk something needs to be said. If there are questions with a legislative approach, they need to be posed. As for the last point, it's often the best time to make a point when an amendment isn't going to pass because one can use the opportunity to make an argument more forcefully (and perhaps more forcefully than is wise at the time, which is a risk) in an attempt to promote a longterm viewpoint. That is what I tried to accomplish and I was somewhat successful.
The primary goal of our efforts this year should be--in addition to avoiding cuts--to create momentum for comprehensive education funding reform that provides adequate and equitable funding for students throughout Minnesota. This adequacy and equity should seek to create a funding system that recognizes the distinct needs of districts with high levels of need that distinguish them from districts that do not possess those characteristics without having the costs associated with the decisions to remedy these differences endanger funding adequacy for all districts. As we move forward as a nation, no future can be compromised.

Thursday, April 09, 2009

Back to the Blog. I haven't been making good on my promise to provide on-going commentary on the blog and I apologize for that. The only thing I can say is that I've been busier than jumper cables at a hillbilly wedding (sorry Jethro and Ellie Mae) and haven't had enough time to get my thoughts both straight and down on paper.

Senate Bill (Part One) It's not like there has not been anything happening. The Senate E-12 Omnibus Funding and Policy bill passed the Senate floor on Tuesday by a vote of 37-29. This bill is obviously not the most popular item passing through the Legislature this session as it seeks to cut approximately $1 billion from the E-12 budget (primarily through reductions in K-12 general education revenue).

The primary problem--and it is the primary problem by about six light years--is the overall cut to E-12 spending contained in the bill. The Senate leadership's approach this year has been one of truth-telling and it's hard not to charge the Administration (and the House to a lesser extent) with political and policy legerdemain in avoiding the short- and long-term budget issues faced by the state. We are looking at approximately a $4.6 billion revenue shortfall (actually around $6.4 billion if one take the federal stimulus revenue out of the equation) and one can argue (although we haven't seen the House's set of appropriations bills) that no really difficult decisions have been made by anyone other than the Senate. I am not going to laud their approach as I believe the cuts to education are unwise anyway one views them, but I also believe it is important to look at both the spending and revenue generation sides of the budget equation and the Senate, unlike the Governor (who chose to cut corporate taxes), has done that.

The other problem, not nearly as serious, but troublesome for a vast majority of SEE districts and clearly indicative of the larger education funding formula issues SEE has been studying over the last five years is the decision as to how the cuts would be administered. Many of you who attended the regional meetings may remember the handout that showed what a 10% (or thereabouts) cut to the general education basic formula would mean in terms of per pupil revenue in each district. Because the general education basic formula is tied to a number of other general education sub-formulas (particularly compensatory, sparsity, and transportation sparsity), that run showed those districts with high levels of any of those funding categories getting cut more than districts with lesser levels of the geographic and demographic characteristics that fuel the set of sub-formulas. Clear on that?

The prevalence of these characterstics create considerable--but justifiable--differences in the amount of state aid each district gets. Districts with higher numbers and building concentrations of students receiving free-and-reduced priced lunches and districts that are geographically isolated receive more--sometimes considerably more--in terms of per pupil revenue that districts that lack those characteristics. Because a vast majority of SEE districts are geographically relatively compact and have lower levels (at least in the pre-real estate meltdown era) of free-and-reduced price lunch students, they get lower levels of general education revenue. According to my trusty annual revenue rankings for the 2008-2009 school year, the average for SEE districts in terms of state formula general education revenue (not counting the referendum) is $282 per pupil unit below the state average. Although not applicable to this specific situation, it should be pointed out that when the referendum is added into the mix, the difference becomes $372 per pupil unit.

In applying the proposed reductions--a net of approximately $273 per pupil (approximately $236 per pupil unit) after a cut of $590 per pupil in state aid is "back-filled" by approximately $317 per pupil in federal stablization aid delivered by the stimulus package--the Senate, instead of making the reduction in a way that included the revenue from the general education sub-formulas, decided to "fence off" revenue delivered through compensatory, english language learning, sparsity, transportation sparsity, and equity (didn't want to leave this one out because I wanted to show everyone that, yes, even though our districts don't get a ton of consideration through these formula adjustments, we do get some) and protect that from any cuts. Instead, the reduction is a "back door" reduction in the general education revenue basic amount applied after all the formulas tied to the general education amount have been allowed to "run to completion."

Whether or not this is fair is up for debate. I can understand the rationale for protecting the funding categories before applying the overall reductions, but that doesn't mean I necessarily agree with all aspects of this approach. Because of how the proposed cuts are applied in the Senate bill, a district like Sauk Rapids-Rice (339th out of the state's 340 operating school districts) would be saddled with an additional cut over 4.2% from its general fund from its current budget projections. A district like South Koochiching, with the highest level of state-formula revenue in the state largely through sparsity, would reduce its general fund by an additional 2.4%, 1.8 percentage points less than in Sauk Rapids-Rice. Minneapolis, which receives its largest adjustment through compensator, would cut its general fund budget by approximately 2.9% (due in part to its referendum--which neither Sauk Rapids-Rice nor South Koochiching have).

I don't want to make it sound like Minneapolis and other districts with high levels of compensatory or sparsity revenue are the "lucky duckies" in the Senate bill. No one comes out well in this bill. But the Senate's application of these cuts kind of spurred me to action. I will describe the actions I took in reacting to this bill in Part II.