Wednesday, April 29, 2015

Senate Passes Education Funding and Policy Bills.  Yes, you read that right.  Bills, as in two separate bills; one containing the funding provisions and one containing the policy provisions.  The debate was a bit longer than it was in the House with more amendments offered and more of those amendments requiring roll call votes.  The Republican minority centered in on the 1% increase in the general education basic formula in each of the next two years as the spot they sought to address through amendments, but they were unsuccessful in those efforts.  One area they tried to move money from was the proposed increase in school readiness aid contained in the bill.  The Senate bill increases School Readiness Aid dramatically, investing an additional $50 million in the second year of the biennium, and some believe that is simply more than a majority of school districts want or need to accomplish their goals with respect to early childhood education.  It certainly is a healthy investment, but the Senate proposal does fit within the existing School Readiness program and is certainly not the overgrown program suggested by the Governor.  That said, it is a healthy increase and it will likely be a target for discussion as the bill moves to conference committee.  The education funding bill passed on a vote of 39-28, with 5 Republicans (Three of whom serve on the Education Funding Committee) voting for the bill and 5 DFLers voting against it.  That pretty much assures that there will be a Republican member of the conference committee.  The vote on the education policy bill was even stronger, with a final tally of 53-13.  A dozen Republicans joined the DFLers to come to that total.  The was only one amendment requiring a roll call--an amendment similar to the one approved by the House on Saturday--that would have mandated separate dressing rooms and rest rooms for transgender students.  That amendment failed on a vote of 25-40 with three Republicans joining the DFLers to defeat the amendment.

The question now is how things will advance procedurally.  The House combined its policy and funding bills into one bill while the Senate has chosen to keep them separate.  That doesn't mean the bills couldn't be negotiated simultaneously; it would just require some fancy footwork.  The Senate appears to be following the pattern of passing separate funding and policy bills for each major issue area and the strategy behind that may be to keep horsetrading of money for policy off the table, especially given that the House budget targets are all much lower than the Senate budget targets.  The Senate may be trying to prevent having to consider taking House policy in return for the House accepting a higher budget target.  That's inside baseball to most everyone--and truth be told, the process starts to resemble a blender on puree during the session's waning days--but all types of considerations take on a fairly large role in the procedural calculus.

It is unclear when the conference committee will begin, but it is my guess the festivities will kick off next Monday with a walk-through of each bill.  We will know then how the "separate bill" issue will be resolved.  I will provide perspectives as information becomes available.

Thanks.  Thanks to all SEE members for participating in our district-by-district survey of how a 1%/1% basic formula increase over the biennium would affect their districts.  It looks like about $89 million in cuts accompanied by a reduction in budget reserves and the prospect of attempts to raise additional revenue through voter-approved referenda.  Not a pretty picture and it helps make the case as to why the final budget target has to be bigger than what either the House or Senate has proposed and how additional revenue needs to go on the basic formula.  Thanks again for getting back to Deb with this useful information.

Monday, April 27, 2015

Weekend Update.  The House passed their version of the omnibus education funding bill on Saturday afternoon.  The debate/amendment process took about four hours, but it was remarkably uneventful.  Changes in House rules over the years have made it extremely difficult to add money to bills on the House floor, which really takes a lot of steam out of the opposition.  Given the House target is so small, I halfway expected a little bump coming from money left on the bottom line in the budget resolution, but that wouldn't have meant a whole lot one way or the other so the majority decided top simply ride it out.  Two somewhat controversial amendments were offered.  One would have allowed school to start prior to Labor Day in any year when Labor Day fell on September 6 or September 7, but that was defeated on a voice vote.  The other amendment--which passed--limits restrooms, locker rooms, and changing rooms to students' birth sex, somewhat changing the policy passed by the Minnesota State High School League last winter.  There was also an amendment that changes policy on the MTLE to allow teaching candidates who have neither passed the MTLE or reached the requisite ACT or SAT score to remain as teachers if they were evaluated as an effective teacher in each of the three years they have been teaching.

After the amending was done, there were a few fiery speeches that changed no one's mind and the bill was passed on a vote of 69-61.  No DFLers voted for the bill and not Republicans voted against it.

Next up, it will be the Senate on Wednesday, where they will pass their bill.  With rules being slightly different and with a bit more money to play with (and the money spread through a few more programs), the amendment process may be a bit more exciting, but that's not a sure thing.  What has been happening more often this year--with the tax/spend battlelines being what they are--the minority caucuses in both houses appear to be employing a macro-strategy that stays at the 30,000 foot level and works the press and the blogosphere.  It's all about battling worldviews (or in this case "stateviews") that will clash in the 2016 election.  Until then, it will likely be a streamlined process until conference committee, where I expect the machinery to get gummed up a bit and the gears will likely be sticking across all of the major tax and spending bills.

Wednesday, April 22, 2015

House Education Funding Bill Clears Ways and Means Committee.  HF 844 cleared the House Ways and Means Committee on a party-line voice vote Wednesday afternoon.  There was only one witness--the president of the Robbinsdale Federation of Teachers--who provided testimony and that testimony was critical of the House target.  We've heard a lot about the House budget target for E-12 of $157 million over the past month and while I always take statements at face value, there were enough comments provided by members of the majority caucus insinuating that they are more than willing to increase their spending on education as the final bill is negotiated.  What is a little maddening is that so many members of the majority caucus keep referencing the $1 billion biennium-to-biennium increase in education funding.  It always has to be pointed out that this number signifies an increase in the base funding for education that is the result of decisions made last biennium, especially two full years of kindergarteners being weighted as a full student.  Add to that increased pupil growth in terms of actual bodies entering the system and automatic increases in special education funding (which still doesn't address the massive shortfall school districts throughout the state experience in terms of special education funding) and the increase in funding due to changes in Local Optional Revenue (and referendum levy increases).  So, while $1 billion is surely a nice chunk of change, it doesn't address inflation in the general education formula at all.

The Senate omnibus funding bill--SF 811--will be up in the Senate Finance Committee at some juncture tomorrow.  The Senate Finance Committee convenes at 8:30 AM, but the Senate Transportation funding and policy bill is first on the agenda.  It is likely that bill will take quite a bit of time to review and discuss, which may push discussion of SF 811 into the early afternoon (or perhaps evening).  Stay tuned.  There usually isn't much in terms of attempts to attach major amendments to bills between the time they leave their finance division and the floor, but that doesn't mean attempts won't be made to re-direct some of the dollars in the bill to different purposes.  I will certainly let you know what, if anything, happens.

Tuesday, April 21, 2015

House Bill Clears Tax Committee.  With the House embroiled in the transportation funding debate today, there hasn't been a whole lot of action on education-related issues.  HF 844 cleared the House Tax Committee yesterday.  There was some concern expressed over the property tax increases to the Minneapolis, St. Paul, and Duluth school districts that result from a cut in aid for integration revenue and alternative facilities revenue.  Because revenue levels remain the same, this requires a shift from aid to levy in these districts and the increase is considerable.  HF 848--the House tax bill that cuts taxes by over $2 billion--was also heard on Monday.  HF 848 contains a number of education-related tax changes and a number of education interests testified.  Rather than provide oral testimony, I supplied the committee with a list of comments that encapsulated earlier testimony I had given on a number of provisions when they were before the Education Funding Division.  Here are a list of the education-related provisions in the tax bill:

  • The education tax credit is expanded to include private school tuition and tuition to early childhood programs.  The income eligibility ceiling for the credit is increased and indexed to inflation.
  • An income tax credit of up to $2,500 is provided to a teacher who achieves a master's degree in their area of licensure.  Credit could be claimed in the year in which the candidate achieves their degree and could only be claimed once.
  • Limits capital levy elections to November of each year.  Only operation levies held in districts in statutory operating debt could be held in a month other than November.
  • Operating referendum question language would have to contain a amounts levied by board through the local option levy and the $300/PU board-approved referendum.
  • Provides credit of 50% of taxes paid on agricultural property for debt service.
The statewide property tax is phased out over six years, with the first $500,000 of value of a commercial/industrial parcel and first $250,000 of a seasonal/recreational parcel exempt from the the statewide while the phase-out is in effect.  The student achievement levy of $20 million was repealed in the House E-12 funding bill.

HF 844 (back to the E-12 funding bill) will be in the House Ways and Means Committee tomorrow.  There will likely be very little testimony with discussion centering around the size of the budget target and little else.  It is unclear when the Senate bill will be heard in Senate Finance and the Senate Tax Committee.

Wednesday, April 15, 2015

Can I Get a Witness?  They didn't have to look too far for one or two (or a couple of dozen) in the House and Senate Education Finance Divisions today to find a person willing to talk.  The day began in the Senate Education Funding Division.  After a short bill run-through, the attention turned to witnesses from various education interest groups providing their viewpoints on the bill.  The Senate bill, as described yesterday, covers the waterfront in terms of initiatives.  The centerpieces of the bill are the deferred maintenance program that will provide assistance to school districts throughout the state with on-going building repair needs, a $70 million increase in school readiness (more about that later), a 1% increase on the basic formula in each year, and $20 million in additional revenue to the alternative compensation (QComp) pool.  If there is a criticism of the Senate bill is that it doesn't increase the general education formula at the level of inflation (and that is a valid criticism).  But when your target is $350 million (a little more than half of the Governor's target of $694 million, you don't have a lot of leeway to put money on the formula if you are pursuing anything other than the formula.  If the entire $350 million were put on the formula, it would amount to approximately 2%.  In fairness to the Senate, they have matched the Governor's 1% on the formula (and, as stated above, the Governor proposed a much larger target that is largely devoted to universal school-based pre-kindergarten programs).  The recurring theme in most of the testimony today was if the final budget target for education increases beyond the Senate's $350 million, that increment should be directed toward the per pupil formula,  The other question that is hovering over the bill is the nature of the school readiness increase.  Is this program more like the current school readiness program or the universal pre-kindergarten program proposed by the Governor?  These and many other questions have yet to be answered.

The testimony in the House is a little tougher because there target is so low and what can you say about a low target?  There are some interesting things in the House bill that will be helpful to SEE member districts.  Non-metro districts will get a little revenue bump through a change in the equity formula and there's an equalization enhancement for districts with high levels of seasonal/recreational property.  It is interesting to point out that the percentage of target devoted to the general education basic formula is higher for the House bill than it is for either the Governor's proposal and the Senate bill.  Of course, that advantage becomes relatively meaningless given the fact that the House target is so low, but I think it does indicate that the House's top priority for funding is the basic formula.

Both divisions intend to amend their bills tomorrow and it will be interesting to see how many amendments are offered and the nature of these amendments.  I will provide a report tomorrow.

Tuesday, April 14, 2015

The Eagles have Landed.  The House and Senate Education Finance Divisions both released their bills today and below is a brief summary of the primary provisions contained in each bill.  The House target of $157 million is almost $200 million lower than the Senate's target of $350 million.  Both of these targets are dwarfed by the Governor's target of $694 million, but there are some inventive provisions in both bills.  So starting with the House, here are the highlights in that bill:

  • $33/PU increase in the general education basic formula for next year and an additional $34/PU in the subsequent year.  This constitutes a  formula increase of approximately 0.6% in each year of the biennium and costs $97 million.
  • Change in compensatory formula.  Current levels of funding generated with formula including concentration factor is held harmless.  Future revenue distribution does not include concentration factor.
  • Repeal of the Student Achievement Levy--the new general education levy created in 2013--of $20 million.  This levy is then spread to several other programs, sometimes without directly generating any new revenue.
  • Increase in the equity formula for non-metro districts in the second year of the biennium.  This provides an additional $8.5 million for non-metro districts ($2.5 aid/$6.0 levy).
  • $2.5 million in increased extended time aid for school districts and $2.0 million in increased extended time aid for charter schools.
  • $9 million to pay for costs associated with concurrent enrollment.
  • $6 million for the Minnesota Reading Corps.
  • Cuts in aid for integration and alternative facilities aid.  The aid reduction is offset by levy increases, leaving the total revenue amounts largely the same.
  • $9.5 million increase in School Readiness over the biennium ($4.5 million in FY 16 and $5.0 million in FY 17).
  • $30 million increase in Early Childhood Scholarships.  Amount for Pathway 2 scholarships capped, but Pathway 2 not eliminated.
  • $3.6 million reduction ($1.8 million per year) for Minnesota Department of Education.
Here is a link to the documents.  Bill:  HF 844 delete-all  Summary:  HF 844 Summary

And now to the Senate:

  • 1% increase in the basic formula in each year of the biennium.  Total cost is $173 million.
  • $20 million for districts not participating in QComp to perform teacher evaluation duties.
  • $ 4 million to pay for costs associated with concurrent enrollment.
  • $ 8 million in incentives to hire student support personnel.
  • Long-term facilities revenue program created at $200/PU in FY 17 (Pay 16), $300/PU in FY 18 (Pay 17), and $400/PU in FY 19 (Pay 18).  $63 million in aid to equalize levy associated with the program in FY 17.
  • $4.6 million for Reading Corps.
  • $70 million increase in School Readiness
  • $5 million increase in Early Childhood Scholarships.
Documents:  Bill:  SF 811 Delete-all  State Aid Tracking Sheet:  SF 811 State Aid Amounts/Changes
School Readiness Run:  SF 811--New School Readiness  General Revenue Run:  SF 811--General Education Change

So there you have the outlines of the two bills.  Again,the lower legislative budget targets have made it difficult to a bill that truly meets the needs of the state's education community.  The Governor has the highest target, but with so much of it invested in universal pre-kindergarten programs, it leaves room for little else.  Right now, the biggest increase in the general education basic formula amount is 1% (shared by the Senate and Governor) and that lags well behind the lowest measure of inflation.  There are good things in both the House and Senate bills, but the centerpiece of school funding is largely ignored.  It's difficult to be too critical at this juncture because there is a lot of territory yet to be covered before the May 18 adjournment, but if there were ever a year when education could have been "caught up" to a great extent after a decade-plus of uneven funding, this was the year to do that, especially after the forecast surplus ballooned to $1.9 billion.

There's still time to right the ship.  I would say that if you took the Senate framework with the Governor's target (the difference between the targets going on the formula) and incorporated in some of the elements from the House bill, you'd have one heckuva bill.  So, here's hoping things fall together.

Sunday, April 12, 2015

The Week that Will Be.  It's not Que Sera Sera time yet, as the contents of the omnibus education funding bills have yet to be introduced.  That means there is still some time to get some last-minute lobbying in (and I have been doing a little on both sides of the street).  It's difficult to discern at this precise moment what the bills are going to look like.  The Senate target of $350 million is almost $200 million more than the House target of $157 million (and both targets are well below the the Governor's target of $694 million).  That gives the Senate a little more elbow room to put together a more wide-ranging bill (it would be difficult to call it comprehensive with the target where it is) and I expect that the Senate bill will contain provisions on facilities, student support personnel, and early childhood education in addition to an increase on the basic formula.  A 1% increase in the formula costs between $55 million and $60 million per year, which would mean a biennial increase for a 1% increase in both years of the biennium between $165 million and $180 million.  That's the formula increase in the Governor's budget recommendations and that would absorb half of the Senate budget target.  One advantage for the Senate is that because there are property tax implications with most any facilities revenue increase, any state aid costs related to the equalization that would likely accompany any levy increases would only have to be carried in the second year of the biennium (Pay 2016/FY 2017), which would in effect cut the cost of any change in half for this biennium (I'm assuming--always dangerous--that if there is an increase in facilities revenue it will not come in the form of "aid only").  I still don't know what the tea leaves have in store in the Senate.

In the House, I think things will get really inventive.  Given the $2.2 billion tax cut target in the House budget resolution, there may be the opportunity to carry the state aid costs that would accompany changes in education-related levies, but given the calculations on what it costs to put money on the basic formula, the House cannot even match the Governor's 1%/1% unless they de-link compensatory revenue and sparsity revenue from the basic formula increase (and even then it gets really tight).  The possibility exists that some revenue categories could be combined with money moving toward the basic formula as a result, but it's hard to see which categories could be the target of such a strategy.  Needless to say--and this goes for all three of the budget targets (Governor, Senate, House)--there are going to be a lot of districts contemplating going to the voters for a referendum if the general education basic formula is only increased by 1%.

I was WRONG!  Mark it down (you've probably got a notebook full of my mental miscues and misstatements already, so this is nothing new).  Last week I reported that the funding bills had to be out of their last committee by April 24.  That is not the case.  The bills only need to be out of their funding division by that point.  Given we are five weeks away from the constitutionally-mandated adjournment date for the regular session, that might constitute a distinction without a difference, as the Education Funding Divisions appear intent on getting their bills of committee a week before the April 24 deadline.  That means they could conceivably clear the Tax and Finance/Ways and Means Committee treks before May 1.  That would give the conference committees two full weeks to put together a package to bring to the respective floors of the Legislature.  That seems like a tight time frame and in some respects it is.  But it certainly isn't an impossible task.

Interesting Bill.  HF 983 authored by Representative Eric Lucero was heard last Friday afternoon in the House Education Finance Division.  This bill takes a bit of a different tack on providing funding equity for low-funded school districts.  The bill targets revenue to districts that are both in the bottom 20% of per pupil general education funding (minus referendum) and the bottom 20% in referendum market value per pupil unit.  Of the 21 districts who meet these two criteria, 11 are SEE member districts (as Gomer Pyle would say "Surprise!  Surprise!  Surprise!).  All but a handful of SEE districts fall well below average in per pupil general education funding (with or without including the referendum) and we are property poor districts.  The projected biennial cost of HF 983 is approximately $19 million, which makes it a tad on the pricey side for the House target of $157 million, but that doesn't mean it can't or won't happen.  At the very least, the bill is another reminder of how so many SEE districts find their way to end of the line with limited resources at their disposal and impaired ability to improve their revenue position with voter-approved levies.

Wednesday, April 08, 2015

Testimony on Governor's Supplemental Budget.  Lots of bills heard today in both the House and Senate Education Finance Divisions, but most of the attention was paid to testimony on the Governor's supplemental budget recommendations, which have driven his budget target for the E-12 budget area up to just under $700 million.  Given the House's E-12 target of $157 million and the Senate's of $350 million, we're all hugging up the Governor's target.  The problem is that out of his $700 million target, he has managed to recommend only a 1% increase in the general education basic formula amount for both years of the bienniums.  Paraphrasing Mr. Rogers, "Can you say 'cuts,' boys and girls?"  It's difficult to see how the situation will get much better given the targets in the House and Senate, but I wrote about that yesterday.  The other highlights of the testimony centered around concern over the Governor's recommendation for universal all-day pre-kindergarten.  One witness testified for the concept, but most everyone else mentioned it as something that the state isn't particularly ready for because of space and transportation concerns (that was a consistent message from the education community) or it's simply an unwise use of resources (that was coming from the private early childcare providers).  Given the House's budget target, I don't think we'll be seeing any revenue dedicated toward this initiative of the Governor's.  What happens in the Senate remains to be seen, but indications are (and again, given the size of the target) that the reception on that side of the street won't be that much warmer.  I'm guessing there will be money for early childhood scholarships in both the Senate and House bills and maybe some revenue from School Readiness.  I've been wrong before, but that seems to be the way the wind is blowing right now.

Other than that, the testimony centered on things that weren't in the Governor's budget:  less than stellar support for the general education basic formula, no increase in support for deferred maintenance for school districts, and no revenue to pay for teacher development and evaluation.  Dr. Jim Behle, St. Michael-Albertville superintendent and SEE Legislative Chair, provided SEE's perspectives on the Governor's budget recommendations.

Tuesday, April 07, 2015

We're Back in the Saddle Again.  The Legislature has returned from its Easter/Passover break and the next two weeks are going to be extremely hectic with the deadline for all of the finance and tax bills to be out of their last committee and referred to the floor just over two weeks away.  The Senate Education Finance Committee announced its schedule for the next ten days at this morning's meeting.  The remainder of this week will be dedicated to hearing bills heard in the Education Committee that were referred to Education Finance due to fiscal implications contained in the bills along with measures that either create new programs with appropriations or increase the appropriations for existing programs.  The formal funding proposal for the division will be posted online next Tuesday, with review and testimony taking place next Wednesday, and final mark-up of the bill taking place Thursday with amendments offered.  The bill will then go to the full Finance Committee and the Tax Committee, which would take place the week of April 20.  The schedule for the House bill has not been announced yet, but I assume it will be similar.  The only difference is that the House bill will go to the House Tax Committee and then Ways and Means as it makes its way to the House floor.  The last week of April and the first week of May will involve marathon floor sessions at which all of the appropriations bills will be passed.  Conference committees to reconcile differences between the House and Senate bills will likely start the first week of May.  With the curtain on the 2015 legislative regular session slated to end on midnight May 18, that would mean a mad rush to the finish line.

Shock and "Aw, Shucks."  That's how I'm describing the education budget target situation in  the House and Senate.  I reported when I blogged last that the House budget target for E-12 was $157 million, less than 25% of the Governor's target of $694 million.  The Senate released its budget target on Friday, March 27, and they announced a target of $350 million, just over 50% of the Governor's target.  Hence, the "shock" of the House budget target being so low and the "aw, shucks" that the Senate budget wasn't higher so that the reconciliation of the final budget target could be pushed up as high as possible.  I hate to overreact in these instances.  Chronologically, we're nearing the end of the session, but in terms of the work of the session, we're basically in the third inning with a lot of game to be played.  That said, it is disappointing in a year in which we are looking at a very healthy budget situation that the targets could be higher.