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5.12.09 Update: Best Case E-12 Budget is Adopted in Conference Committee
After a few weeks of conference committee negotiations, the House and Senate DFL agreed to a budget target for all E-12 programs. The highlights of the proposed funding package include “0&0” on the basic formula and no payment shifts whatsoever. There were no cuts to other programs in the bill, and in fact, the math and science teacher academies are funded at $750,000 each year. The controversial shared services legislation (SF 10) is not included in the final E-12 conference report. HF 2 is the vehicle bill for the E-12 conference report, and it will be debated on the House and Senate floors Wednesday afternoon and evening. https://www.revisor.leg.state.mn.us/bin/bldbill.php?bill=ccrhf0002.html&session=ls86
This conference report is the best case budget scenario schools are looking at in this historic budget deficit session. However, school personnel shouldn’t get too excited as of yet. The Governor hasn’t agreed to this funding proposal and few of his reform initiatives are included. Furthermore, the Legislature and Governor have yet to reach a global budget deal. The budget bills adopted so far by the legislature leave a $3 billion unresolved deficit for the next biennium. This means that a fight to override the recently vetoed tax bill ($1 billion in new revenue) will ensue later this week. A school payment shift could resurface along with the Governor’s controversial revenue bond. Depending on the mix of new revenue and shifts, we could still see additional budget cuts to education and health & human services programs.
The best thing you can do for public education at this point is to contact your legislator and ask them to support the HF 2 conference report and to vote to override the Governor’s veto of the $1 billion tax increase legislation. This is education’s best shot at avoiding a steep payment shift and cuts to the formula.
5.11.09 Update: It’s Finals Week for the 2009 Legislative Session
One week from today, the 2009 regular legislative session will close as required by the state’s constitution. The DFL Legislature and Governor Pawlenty are still miles apart on a budget deal, and Governor Pawlenty has started to rack up vetoes. Last week, Pawlenty vetoed the Economic Development Finance bill because it contained a provision allowing the state to pay off part of the Xcel Energy Center in St. Paul. On Saturday, he vetoed a tax bill that was hastily put together by the legislature and would have provided $1 billion in new revenue - the same amount Governor Pawlenty is asking for with his revenue bond. The difference between the two approaches is that the DFL plan would provide on-going revenue to stave off deep cuts in the fiscal years 2012 and 2013, and Pawlenty’s plan would create a 20 year budget burden costing $1.8 billion to repay the bond.
This week, Speaker Kelliher will continue to use the Legislative Commission on Planning and Fiscal Policy as a bully pulpit to show the public what the budget cuts will look like without any new revenue. The House DFL has already served notice on deeper K-12 cuts without new revenue. Schools could receive 4.5-5% budget reductions along with a giant aid payment shift. Behind the scenes, the Speaker and others will be working over members of the GOP to try to garner three votes to override Pawlenty’s veto of the latest tax plan. This will be difficult to accomplish, but it’s the best attempt to stabilize the state’s budget over the long haul instead of patching through a two year budget full of shifts, revenue bonds and massive cuts.
E-12 Conference Committee Working on Policy Issues
There hasn’t been a lot of action in the E-12 conference committee, but the House and Senate continue to have staff work on policy provisions. They have traded offers on some key policy issues, and you may want to contact your legislators if any of these issues are a concern to you.
Other Post Employment Benefit (OPEB) Bond -- the House has a provision that would require districts to go out for a referendum to issue an OPEB bond. Current law allows the school board to do this, and many districts have already utilized this authority. This new provision isn’t fair to smaller districts because they were later in the Governmental Accounting Standards Board actuarial process, which determines an entities OPEB liability. In other words, smaller districts haven’t had the same amount of time to make a decision on utilizing an OPEB bond as larger districts. At a minimum, this board authority should be extended for several more years.
Shared Services -- the Senate continues to push the shared services legislation proposed by Senator Bonoff. The proposal would require that districts purchase goods and services from the state’s purchasing contract, service cooperatives, joint powers agreements or demonstrate why they chose not to purchase from these entities. The proposal also calls for the state to enter into a contract for consulting services to work with districts on developing shared services plans. The consultant would be paid by withholding aid from districts where savings can be demonstrated.
5.6.09 Update: Less Than Two Weeks Until Adjournment and No Budget Deal
All of the major budget bills are in their respective conference committees. Many of the conference committees met over the last weekend to work out policy differences between their bills. The E-12 conference committee continues to plug away on policy language, and we spent the better part of today debating charter school reform and shared services.
The Senate is trying to include the language from SF 10 (Sen. Bonoff’s mandated shared services purchasing legislation) in the conference committee negotiations. The House is very resistant, and no decision has been made at this time.
The proposal to create a 36 month moratorium on new charter schools springing up in recently consolidated districts or within one-mile of a school closing faces an uphill battle in the conference committee. The Senate has this provision, but the House is resistant to it. We are trying to work out a compromise that would tighten up the application process to make it very clear that charters can’t spring up simply to reopen a school that would otherwise be closed.
Another issue that is pertinent to rural schools is a proposal from the administration to only pay for school readiness programs that offer at least 12 hours a week of programming. Rural members on the conference committee have expressed concern that this will hurt smaller rural programs.
Last, but not least, are the overall budget negotiations. Several House members have told education lobbyists that public education needs to step up and start screaming for new revenue or the proposed cuts to K-12 are going to get worse. This isn’t an idle threat. MREA has included information in previous updates stating that all three sides agree they need new revenue to solve the budget. However, the DFL Legislature and Republican Governor can’t agree on where to find the revenue. If they can’t find new state revenue, then we’ve been told districts will be looking at a large aid payment shift and 4.5-5% cuts in the formula.
Now is the time to step up calls and e-mails to your legislators and the Governor asking them to spare education from devastating cuts and to solve the budget deficit with a balanced approach.
4.28.09 Update: Education Conference Committee Members Named
Late Monday afternoon, the House and Senate named the members of the education conference committee. They will begin meeting Tuesday afternoon at 4:00 pm. It is likely that this first meeting will be a walk-through of the two different education bills so members can become acquainted with each other’s proposals.
Senate conferees: Senators Stumpf-DFL, Olson-R, Wiger-DFL, Saltzman-DFL and Dahle-DFL
House conferees: Representatives Greiling-DFL, Mariani-DFL, Slawik-DFL, Ward-DFL and Garofalo-R
4.27.09 Update: Three Weeks to Go and Miles Apart
Last week, the House and Senate DFL majorities passed their respective tax bills and most of the major omnibus spending bills. This week, the two bodies will establish conference committees charged with negotiating the differences between the House and Senate versions of spending legislation, including the omnibus education funding and policy bill. As of today, the legislature and Governor have exactly three weeks to finalize their work on solving a $4.6 billion budget deficit. The state’s constitution requires this session to end on May 18th.
The DFL Legislature and Governor remain miles apart in their priorities for balancing the budget. On one level, it seems as if the three parties are closer than they appear. All three are proposing roughly $2 billion in budget cuts and $1.5 to 2 billion in new revenue. A host of fees and payment shifts are in the mix as well. Even though they are relatively close on the macro level, the three parties have vast differences in budget priorities and how and where to raise revenue.
The Governor is proposing that the state sell a revenue bond based on future tobacco endowment payments for $1 billion. The problem is it will cost the state $1.7 billion to pay back the bond over the next 20 years. Some have characterized this approach to taking out a second mortgage to pay for groceries. The House DFL brought up the revenue bond as a floor amendment to the State Government Finance bill last week, and the amendment died overwhelmingly on a 2-130 vote. If the Legislature isn’t buying the revenue bond, neither is the Governor buying the proposed DFL income tax hikes. The Governor has publicly stated that he will veto the DFL tax bill if it lands on his desk in its current form.
In the education arena, the current funding “spread” is a Senate DFL low of -3.2% to a Governor high of +2%. The House DFL has proposed flat funding for E-16 programs. Keep in mind that these funding levels are based on new state revenue. If the three parties can’t agree on a source of new revenue, then the budget picture will worsen.
At this point, most legislators will tell you they don’t know how we are going to get out of this session on time with a compromise budget deal. Some in the DFL camp want a show down with the Governor and welcome his threatened vetoes as a way to draw a clear distinction between their approaches to the budget. This means a June special session is looking more and more likely by the day.
Fund Balance Controversy
Last week, the MREA legislative committee was in St. Paul and had a chance to meet with both Representative Greiling and Senator Stumpf, chairs of their respective education finance committees. Both chairs said there was no desire on their part to see school district fund balances used to solve the state’s deficit. There is some discussion about how serious the threat of raiding fund balances actually is. The fact that educators have been talking to their legislators about it is a good thing. Regardless of how serious the threat is, our grassroots efforts are making it clear in politicians’ minds that they simply can’t go there.
Type III Bus Modification bill signed into law
Last week, both the senate and house sent their Type III bus modification bills to the Governor for signature after they had passed off their respective floors. The Governor signed the bill (SF33) into law, and the bill is effective now.
The Bigger Picture
As we look toward the end of this session, whatever it may bring, it is obvious that the showdown between the Democrats in both houses and the Governor, over the implementation of new taxes, will focus our attention in the next few weeks. Each of the major omnibus bills has groups who are fighting for financial support. These individual groups are part of a bigger struggle. Minnesotan’s are in the process of trying to decide what services they really want and whether they are willing to pay for them.
The approach to this bigger issue usually comes from two directions. One view is deciding what services we want and then figure out how to pay for them. The other view is that we have a fixed amount of money that we can raise – let’s figure out what services we can buy with that amount of money.
We might see this struggle through the eyes of educators, while others might see it through the view of cities, counties or other interest groups. Minnesota’s constitution may only require the state to provide a system of roads and a uniform system of education, but as Minnesotans, we have become accustomed to a certain level of services. These define who we are and how we live. How we value education, roads, light rail, health care, parks, helping the down-and-out, the environment, the arts… we use all of these and more to describe our way of life. Now, as we struggle to pay for the things to which we have become accustomed, our thoughts turn to what we can afford.
Make no doubt about it; what we are seeing played out by our elected representatives is exactly the bigger picture that Minnesota needs to wrestle with. We believe that education is important, and it is! But governing takes a majority will, regardless of how we, as educators, may feel. However this session ends up, the battle over the expectations of Minnesotans for various services will continue into the future – as it has in the past. The only way we can affect that is to be involved. We want to express our thanks to you for your phone calls, emails and other contact with your legislators. That is how we impact this bigger picture discussion, and that is the strength of MREA.
4.20.09 Update: Senate E-12 Omnibus Bill Clears Floor Vote 37-29
The first spending bill the Senate DFL ushered to the floor is the omnibus E-12 finance and policy bill. SF 1328 cleared the Senate floor before the Legislature adjourned for spring break a week ago. The Senate DFL education plan calls for a 3.2% net cut to schools for fiscal years 2010-11. The bill originally left the Senate E-12 Budget Division with a new consolidated levy that would raise $500 million in the tails (fiscal years 2012-13) to maintain the 3.2% cut instead of the deeper 7% cut that was originally called for. However, after leaving the Senate Tax Committee, the new revenue generated by the consolidated levy was eliminated. Therefore, SF 1328, as passed by the Senate, contains a 7% cut to education in fiscal years 2012-13. This is one of two central reasons why the E-12 omnibus bill received little support, 37 votes or just three more than needed to pass. The E-12 omnibus bill is usually one of the most popular bills and generally receives bi-partisan support.
The other reason for the lack of support for the bill is the way the 3.2% cut is distributed across districts. The state aid reduction of 3.2% is distributed equally among all school districts in the form of a $273/AADM reduction in fiscal 2010 and is carried forward into the tails. The argument from some is when times are good and money goes on the formula, some districts get more than others because the categorical programs tied to the basic formula (compensatory and sparsity) drive more dollars to qualifying districts. The same goes for special education dollars going to districts with higher expenditures than others. The complaint about the Senate DFL’s approach is now, when times are bad, all districts will have to share equally in the pain, even though some did better in the “good” times. The counter argument is that the categorical programs are needs based programs, so it’s fair to reduce districts by an equal per pupil amount when times are tough.
The Senate also moved to take all of the education mandate relief provisions out of SF 1328 since they were adopted in SF 3, the Senate’s omnibus mandate relief bill. This means we will have to work on another bill to see that some mandate relief is included in final legislation this session.
House K-12 Omnibus Bill is Moving Forward
The House K-12 omnibus bill (HF 2) is moving ahead and will be debated on the House floor later this week. The bill contains no cuts to school aids, but does rely on an enormous aid payment shift. Instead of the 90/10 schedule, the state would pay districts 73% of their aids in the current fiscal year and make the other 27% of their payment in follow year. Rep. Greiling called the House bill a “Spartan bill” and wished more could be done to help school budgets. She also reminded the committee and audience that the House position calls for $1.5 billion in new revenue, which allows the House position to maintain no cuts to education. More on new revenue in a bit…
HF 2 was the original Minnesota Miracle education finance reform bill. The language of HF 2 is contained in Article 9 of the new omnibus bill. Since the state is so broke right now and can’t afford a new funding formula, the legislation proposes to phase in the new formula starting in fiscal year 2014. Rep. Greiling has said that if legislation isn't built into the current system, there will be no real chance of getting substantial new revenue for the school system. This argument is based on an assumption that pressure will build to actually fund the new formula. Under current budget forecasts, building a new formula into statute would make budget forecasts look worse, since the new proposed formula costs much more than the current system. If there isn’t new revenue generated by the state to pay for a new funding system, then schools would be in a similar situation as they are today, whereby formulas are prorated and sometimes levies are used to backfill state aid shortfalls.
An Emerging End Game?
This time of year, people start to ask what the end game is, meaning how are the House and Senate DFL leadership going to finalize a budget deal with Governor Pawlenty. Five weeks from today, the legislative session will come to an end whether or not a new budget is passed into law. Special sessions aren’t so special anymore, and we’ll likely see a special session in mid to late June as the second attempt to get a budget deal done before the state’s fiscal year ends (June 30th).
At this point, the Senate DFL has said they will propose $2 billion in new revenue and the House DFL will raise $1.5 billion. This is counter to Governor Pawlenty’s continued stance against having state government raise any new revenue. If the legislature puts a tax bill on Pawlenty’s desk that raises taxes to finance their spending bills, Pawlenty will veto the bill and any spending bills that rely on new tax revenue for support.
Recent elections have given the DFL substantial majorities in both the House and Senate. The Senate DFL has 46 members, one more than is needed to override a veto. However, the House DFL has 87 members, three shy of the 90 votes needed to override. The only way a tax bill could be overridden is if several House GOP members agree to override a veto, and from all indications this session, there isn’t one who is willing to do this. In fact, several of the House DFL suburban members are said to be very averse to raising taxes in the current budget climate. Many of them represent districts where their constituents “over bought” in the housing market, which isn’t stable yet, and adding income tax or other tax burdens on them is problematic from their view.
What does this mean for state funding for education? Basically, it means the House and Senate DFL education proposals are the top end of the financing schools can expect. When the new revenue to support the DFL budget plans goes away, the education budget will likely take another hit. In what form that hit comes is now a matter of speculation. Recently, there has been talk that the state could recapture school district fund balances. This is certainly a possibility, even though it’s the most painful for many rural districts.
The difficulty in speculating on the downside is that nothing has been proposed in legislation to date. A proposal to recapture reserves might not show up until a June special session, weeks after the education community left for the summer. Generating political pressure now is more important than ever. We have heard from several legislators that they aren’t hearing an outcry from the education community over the budget. This shouldn’t surprise them since their proposals have mostly spared education considering other proposed cuts and the historic deficit the state is facing. The point some legislators are trying to make is that education needs to join the rally for a fair budget, one that includes new state revenue, or education will also share in much deeper budget pain.
4.6.09 Update: Senate DFL Education Plan Unveiled
Last week, the Senate E-12 Budget Division moved SF 1328, the omnibus E-12 finance & policy bill, forward. By Friday, it had cleared the full Senate Finance Committee. The bill now awaits action in the Tax Committee. The Senate E-12 bill reduces state education aid by 7% ($973 million) in fiscal years 2010-11. The Senate plan also backfills this cut with $520 million in federal stabilization aid. The net reduction to districts is 3.2% in fiscal 2010, and this carries forward through fiscal year 2013. The federal stimulus money runs out in 2011, so to keep the cut to only 3.2% in the tails (2012-13), the Senate plan calls for the creation of a consolidated levy.
The plan would create the consolidated levy two school years from now by rolling the Transition, Equity and Operating Capital levies together. The three levies are scheduled to provide $227 million in education funding in fiscal 2011 under current law. The Senate DFL proposal is a financial “wash” that year. However, in the next biennium, the consolidated levy will raise $500 million in new revenue for education. There would still be a net cut to schools in fiscal years 2012-13 with the consolidated levy’s new revenue generation, but a 3.2% cut is better than a 7% cut.
The state aid reduction of 3.2% is distributed equally among all school districts in the form of a $273/AADM reduction in fiscal 2010 and is carried forward into the tails. This is a source of consternation between senators, even those from the same political party. The argument from some is when times are good and money goes on the formula, some districts get more than others because the categorical programs tied to the basic formula (compensatory and sparsity) drive more dollars to qualifying districts. The same goes for special education dollars going to districts with higher expenditures than others. The complaint about the Senate DFL’s approach is now, when times are bad, all districts will have to share equally in the pain, even though some did better in the “good” times. The counter argument is that the categorical programs are needs based programs, so it’s fair to reduce districts by an equal per pupil amount when times are tough.
The new federal IDEA funding hasn’t been factored into these figures yet, but the Senate E-12 Committee did receive a district by district run of IDEA part A and B funds. The Senate’s E-12 bill leaves special education funding alone. This isn’t surprising given their recent and steady support of special education funding. The Senate DFL plan also avoids aid payment shifts. Chairman Stumpf said the state just finished repaying the 2003 shift and doesn’t think it’s wise to do that again, if for no other reason than it’s a one-time fix and Minnesota is facing a four-year budget problem.
SF 1328 also contains several policy provisions that MREA has been working on this session or has a general interest in. These include:
3.30.09 Update:
Last Week before Omnibus Spending Bills are Released
Late in the week, the Senate E-12 Budget Division may unveil an omnibus spending proposal. Keep in mind, the Senate DFL plan is to cut $973 million (7%) from education. The Senate education cut will most likely include some “back filling” from federal stabilization funds. The amount of stabilization funds for K-12 could be about $650 million, but we won’t know for sure until their plan is released. This would mean a cut of approximately $320 million to K-12, which is about 2.5% each year off of the formula. We don’t know if the Senate plan is to cut the formula or make across the board cuts to all education programs. The Senate plan will also include 7% cuts into the “tails”, or fiscal years 2012 and 2013.
The House K-12 Committee will likely release an omnibus budget proposal a week from Tuesday (April 7). The House proposal will hold funding for schools harmless. As for HF 2, or the new Minnesota Miracle, we’re not sure how Chair Greiling plans to include it in her bill. One speculation is that she will include language in her bill phasing in a new formula several years out from now. It will be interesting to see how this works.
As of Wednesday, April 8, the legislature adjourns for a week for Passover/Easter. They will return on April 14. The omnibus bills have to be out of their respective finance committees on April 16.
Type III Fix Still Moving
SF 30 passed off of the Senate floor last Thursday and now awaits further action in the House. HF 116 is scheduled to be heard Monday morning in the full House Finance Committee. We are still pushing to get it on the Governor’s desk in time for some spring activities, but time is running short for that.
Commonwealth District Grants Proposal
HF 895 was heard in the House K-12 Finance committee last week. Rep. Kent Eken along with Superintendents Jerry Nesland (Menahga) and Mark Schmitz (Staples-Motley) presented the bill to the committee. The proposal would allow the Commissioner of MDE to issue up to three $200,000 grants to groups of at least three Independent School Districts who are willing to put a consolidated administrative services plan together. The legislation doesn’t require consolidation, and the concept of the Commonwealth School District is to keep site based management while facilitating regional administration. Other local governments could be a part of the Commonwealth district too. The grants would go out in two parts; $100,000 in 2010 for planning purposes and $100,000 in 2011 for implementation of the new plan.
This proposal faces an uphill battle in the Senate as they are proposing cuts to schools. If any districts are interested in this opportunity, they should contact Chair Mindy Greiling to let her know there is interest in this proposal. The House DFL plan has a “zero” target for education, and the House K-12 committee might be able to find room for this proposal.
New Proposal for Shared Services
The House K-12 Finance Committee heard HF 1665, which would have the state auditor create an online clearinghouse of examples of good government procurement and shared services among all local units of government. Rep. Swails and Rep. McFarlane presented the bill as an alternative to the proposal contained in SF 10, the shared services bill. The proposal is viewed by the education community as a more productive effort to get a handle on all of the shared services arrangements currently in place. This will help show legislators what is already happening before they create new mandates by way of purchasing requirements.
House DFL Plan:
$1.6 billion in cuts, includinga one-time swap of $749 million in K-12 general fund dollars for federal stabilization fund dollars;
$400 million in permanent cuts to HHS programs.$1.771 billion in education funding shifts; the 90/10 payment schedule would drop to 73/27.
E-12 programs aren’t cut or increased under this plan – the aid payment shift is the burden for education under this plan.
$1.5 billion in new, yet to be determined, tax revenue.
$250 m put back into the state’s budget reserve.Senate DFL Plan:
7% across the board cuts, including K-12 programs. This translates into a $1 billion cut to schools and $600 million in cuts to HHS over FY 2010-11.The Senate DFL plan is silent on the use of federal stabilization funds that could be used to soften the proposed cuts to schools for the next two years.
No aid payment shift to education programs.
$2 billion in new, yet to be determined tax revenue.Governor Pawlenty’s Plan:
Swap about $400 million in state general fund dollars for schools with federal stabilization funds (similar to House DFL proposal).
The K-12 formula is actually increased by $28 million ($29.63/pupil or 0.6% on the formula for one year) through this swap.
$1.3 billion school aid payment shifts (90/10 down to 80/20 and a property tax recognition shift).
$1.4 billion in cuts to HHS programs.
$1 billion in tobacco bond sales (sell state rights to future tobacco settlement payments).
No new tax revenue recommended.
Making predictions about how the budget deficit will be solved is very difficult, especially since the three main parties are on such different tracks. The Governor’s continued “no new tax” position is familiar to all and makes it very difficult for the DFL to raise any new substantial revenue. School funding is by no means safe, even though the Governor and House DFL aren’t proposing cuts to education. The Senate DFL’s position represents the toughest budget medicine of the three, but it’s also the most straight-forward in its approach. Two billion dollars in new revenue and across the board cuts will balance the state’s budget for several years to come, and it leaves the timing of education payments alone.
The House DFL released a spreadsheet showing the effects of a $589 formula reduction, or $615 million cut from K-12. The result is an average loss of $749 per pupil because of the weighting effects of linked, categorical funding. Minneapolis and St. Paul would lose more on average ($876/pupil) than the overall metro average ($744/pupil) and the average of greater Minnesota districts ($755/pupil). However, the worst hit districts on the spreadsheet appear to be northern Minnesota districts who would lose both on sparsity and compensatory. Several of the northern districts would lose $1,000/pupil or more because of this effect. The purpose of this spreadsheet is to show schools what life will be like if there is no new tax revenue to the state. Both the House & Senate DFL caucuses are reluctant to cut HHS programs anywhere near the extent of the Governor.
The next three weeks of legislative work will be a frenzy to move policy bills around and put omnibus budget bills together. The public has until the third bill deadline on Thursday, April 16, to weigh in on policy and budget matters. After that, the three major parties will be dug in on their respective positions, and leadership will begin to take over much of the process. This makes it difficult for the public to influence legislation.
Push Type III Fix to the House Floor
This Tuesday, the House K-12 Finance Committee will review HF 116, legislation fixing the Type III mess from last year. Chair Greiling wants to hear from school personnel that moving this bill forward now will help district budgets this school year, namely for spring activities. Otherwise, she is inclined to include the language in her omnibus education finance bill, which won’t pass for some time, meaning no relief for spring activities this year. If you are interested in seeing the Type III fix go through sooner rather than later, be sure to contact Rep. Greiling’s office (rep.mindy.greiling@house.mn) before Tuesday afternoon.
Charter School 3-Year Moratorium
Wednesday morning, the Senate E-12 Budget Division will hear SF 867, legislation reforming charter school sponsorship requirements. The legislation includes language that prohibits charter schools from opening for three years in recently consolidated or dissolved districts or within one-mile of a school closing. This provision will be a target in committee Wednesday morning, and it will be difficult to keep this in place. Please contact members of the Senate E-12 Budget Division, and urge them to support the current proposal and to vote against amendments that would take it out. Here is a link to the Senate E-12 Budget Division where you can find contact information for these legislators:
http://www.senate.leg.state.mn.us/committees/committee_bio.php?cmte_id=2008&ls=86
3.16.09 Update:
Senate DFL Announces Budget Balancing Plan - $1 Billion Cut from K-12
Last week, the Senate DFL announced broad parameters for a budget balancing plan that extends through fiscal year 2013. The Legislature recently passed and Governor Pawlenty signed a new law requiring the state budget to be balanced for four years. This is one of the primary recommendations stemming from the Budget Trend Commission’s work last interim. The Senate DFL plan calls for $2 billion in new tax revenue and a 7% across the board cut to all programs. This would amount to $973 million in cuts to K-12 education, $719 million in cuts to HHS programs, $240 million in cuts to local tax aides and credits and $221 million in cuts to Higher Education.
The Senate DFL plan doesn’t specify where the $2 billion in new revenue will come from, but Senate DFL leadership said taxes on services and clothing were not part of the plan. The only other source of tax revenue to generate anything near this amount is from a major hike in the income tax across all income levels. A “blink on, blink off” income tax surcharge has been mentioned in the past. Education aid payment and property tax recognition shifts are not part of the Senate DFL plan as of now, but comments from leadership indicated they were open to using them if needed. K-12 is also likely to receive a large portion of the $800 million in federal stabilization funds. Higher Education will receive a chunk right off the top to buy back the recent unallotment cuts they faced. After that, there will be stiff competition between K-12, Higher Ed and early childhood programs for the remaining funds.
The House DFL majority hasn’t released a budget plan yet, but they are expected to do so within the next week or so. Governor Pawlenty is expected to release a revised budget plan in the next week or so as well. His original budget plan was released before the March 3 forecast, and his original plan left a structural deficit in the 2012-13 fiscal years, which is now illegal.
Shared Services Fight Goes to Senate Floor
SF 10 (Sen. Bonoff, DFL Minnetonka) is scheduled for a Senate floor vote today. Many school officials have contacted their legislators asking them to oppose the bill in its current form. The legislation requires schools to purchase goods and business services through a handful of entities. Districts could exempt themselves from purchasing from these entities, but must document the rationale for doing so. The proposal also requires districts to calculate savings based on a consultant’s recommendations. This creates new administrative burdens at a time when districts are asking for mandate relief.
The proposal also requires districts to work with a state hired consultant to develop shared services plans. The Department of Education will withhold state aid (up to 5% of the projected savings) in order to pay the consultant for their work. The bill does contain language saying these requirements and the consultant process will only last for the next three years. Regardless of the sunset provision, it would be better if the Legislature took another route on this concept.
That’s where Rep. Marcia Swails (DFL Woodbury) and Sen. Dan Skogen (DFL Wadena) come in. They recently introduced legislation (HF 1665 & SF 1559) that would create a shared services best practices center. The proposal requires the state auditor to develop this center in consultation with school boards, regional cooperatives, joint powers organizations and business interests.
If SF 10 passes off the Senate floor it will be shipped to the House K-12 Finance Committee where the companion bill rests. The House has made it clear that they don’t favor the Bonoff approach but, instead, favor the best practices approach found in HF 1665/SF 1559. The issue of shared services is far from over. In the meantime, educators should contact their legislators and encourage them to support the Swails/Skogen best practices approach.
Type III Bus Fix Bill Needs a Push – Contact Chair Greiling
The Senate is poised to send SF 33 (Sen. Olseen, DFL Harris) to the House. The bill made its final stop in the Senate E-12 Committee, which passed it to the floor. The House companion (HF 116) is sitting in the House K-12 Finance Committee. Chair Greiling is thinking of keeping the bill for inclusion in her omnibus K-12 Finance bill. Supporters of the bill are asking her to send it to the House floor so it can get done in time for spring activities. Rep. Greiling has indicated a willingness to do so, but educators need to contact her office (rep.mindy.greiling@house.mn) to let them know this is important to them.
Labor Day
After suffering a loss last Monday in the House Finance Committee, the two-year moratorium on a post Labor Day start found a new home in HF 920. This bill is a mandate repeal bill and is currently resting in the House K-12 Finance Committee. Chair Greiling has indicated that it could become part of the K-12 omnibus finance bill, even though she would rather see it move on its own.
Proposal to Delay High Stakes GRAD Test
The House Education Policy Committee reviewed legislation (HF 501) that would delay the math GRAD test for three years while MDE and the Legislature figure out how to proceed.
Charter School Moratorium
Legislation creating a three year moratorium on new charters within one-mile of a school closing or in a district that has recently consolidated or dissolved is moving in the Senate. MREA and many education groups fought hard to keep this proposal alive in the House, but after surviving two votes in the policy committee it died 11-13 in the K-12 Finance Committee. Chairman Stumpf has indicated support for the proposal, but it will be a fight to keep this alive through the Senate process as well.
Governor Pawlenty addresses the Marshall Chamber of Commerce
Governor Pawlenty spoke to the Marshall business community this past Thursday, focusing on the difficulties Minnesota faces and his ideas about how we can help grow jobs and tax revenue. As part of his presentation, the Governor addressed some of the issues in education. He reinforced comments he made in the past about the need to align the money we spend by transforming education to a performance based system. He stated that he would like to see Minnesota move from a seniority system of pay to a performance based system. Addressing the QComp program, he emphasized that the state should expect and pay for student progress – in all of our districts.
In response to a question, the Governor said his expectation was that local units of government, school districts as part of that, should negotiate a pay freeze. In addition, he felt that the negotiating process favored the unions and proposed using binding arbitration as a way to even things out and get the job done. Governor Pawlenty also addressed special education by saying that if the federal government mandates it, then they should pay for it. He expressed concern for what might be considered over-identification of students who wouldn’t have been identified some years ago because of behavioral issues. The Governor said he would like to see local boards of education be able to vote and opt out of a mandate if they so choose.
3.9.09 Update:
Senate E-12 Committee Pushes Shared Services Legislation Forward
Senator Bonoff’s shared services legislation, SF10, received further review last Thursday in the Senate E-12 Budget Division. Senator Bonoff offered a new amendment to the bill, but the legislation still states that school districts or charter schools are required to purchase goods and business services, when price competitive, from a regional service cooperative or a regional management information center or state contracts available through the Department of Administration. The new amendment states that schools are exempted from this requirement if they can document that lower prices are available elsewhere, or the proximity of another vendor materially affects the delivery of a particular good or service, or an urgent need justifies purchase from another vendor, or a reasonable regional need justifies a purchase from another vendor.
If a school purchases a good or service for any of these reasons, the school must document the rationale for it and make it available for auditor review. Commissioner of Administration Dana Badgerow testified in support of the bill and said her interpretation of the documentation requirement could be a simple note of the purchase order or other relevant forms.
The amendment goes on to require the Department of Education to enter into a three year contract with a consultant to study specific services or activities across school districts and charter schools to make recommendations about combining services and activities in order to promote improved service delivery, efficiency and economy of operation. Schools are required to work with this shared services consultant and may also work with service cooperatives or a regional management information center to create and implement a plan that maximizes the benefits of shared services. The last portion of the amendment is possibly the most problematic. The Commissioner of Education is required to calculate the amount of savings schools experience from this process. The commissioner is then required to deduct up to five percent of the savings amount from a schools basic aid.
There was a lot of opposition testimony and not everyone was heard since the committee was a half hour beyond their normal meeting time. The committee was clearly poised to move the legislation forward, and it did pass out without a single vocal no vote. There were some committee members who expressed concern over the way they were going about this, but in the end, Chairman Stumpf and Senator Bonoff argued that schools need to do this because we need to find major structural savings in the education budget. They both reiterated the facts about our current state budget deficit and that on-going savings reform are needed.
Some of the concerns noted are that the amendment does create a new mandate that will take administrative time. The recently released TIES survey was presented, and it shows a massive amount of joint purchasing and shared services already taking place. This led to questions as to whether or not this legislation is needed. From MREA’s perspective, it looks like this is the Senate’s notice to the education community that we too are on the chopping block this session. That is, unless new revenue is brought in. The fight over new revenue is just starting to bubble.
Labor Day Battle Continues Monday
The House Finance Committee will hear the Labor Day two-year moratorium Monday morning. The vote is expected to be close, and if the committee votes this down, this could be a stalling point for the Labor Day issue this year. Representative Kim Norton (DFL Rochester) is sponsoring the bill and has been doing a great job advocating on behalf of education’s interests.
Charter School Moratorium Faces Another Challenge
On Tuesday afternoon, the House K-12 Finance Committee will hear HF935, the charter school reform bill that currently includes a provision that charters can’t open for three years in newly consolidated or dissolved districts or within one-mile of a school closing. A local board of education can waive this requirement and let a new charter open in their district boundaries.
This provision has survived two House Education Policy Committee votes already and will face its third Tuesday afternoon. A Senate working group on charter schools is considering this provision as well, but there hasn’t been formal committee action on any charter school reform legislation yet.
Mandate Relief
HF920 was sent out of the House Education Policy Committee last week and will be reviewed in the K-12 Finance Committee later this week. The bill doesn’t include a repeal of the 2% set aside. As for the maintenance of effort requirement for school counselors, nurses and social workers, the bill includes a modification to this statute that says the MOE would now be based on FTE’s and not actual expenditures. MREA is still working to eliminate the maintenance of effort provision, but this is what Representative Tillberry, chair of the House work group on education mandates, was willing to compromise on at this point.
The Senate E-12 Division will review SF672 (Sen. Dan Skogen, DFL Wadena) on Tuesday. The committee will take testimony on the bill and possibly go over amendments. If there are mandates you really want to see repealed this year, now is a good time to call your Senator, especially if they are on the Senate E-12 Division.
3.3.09 Update: March Budget Forecast Shows Worsening Situation for Minnesota
The state economic forecast was released, and it confirmed what had been suspected for weeks -- the state's economic situation has deteriorated and state revenues have fallen dramatically since the last forecast was released in November. The projected budget deficit is now $6.4 billion. This is substantially larger than the $4.8 billion deficit that had been projected in the November forecast. The state is also looking at a $236 million shortfall for the remainder of the current fiscal year (ending June 30th). The good news is that the federal stimulus package includes enough funding for the current year, so the Governor will not have to unallot additional funds between now and June 30th. This is good news for schools because there was speculation that state aid payments could have been cut this spring in order to deal with another current year shortfall.
Even though the 2010-11 situation has grown worse, current law authorizes the state to accept any additional federal funding available for medical assistance without the need for legislators to pass a bill, which means the forecast includes a $1.8 billion increase in medical assistance matching funds from the federal stimulus package. This reduces the state's budget deficit of $6.4 to $4.6 billion. The state is in line to receive other federal stimulus funds, but they are not included in the forecast because the Legislature will need to act before the state is in a position to accept those funds. The additional funds include $800 million in stabilization funds that will mostly go toward K-12 and higher education. There is another $2 billion in stimulus funds that will go toward roads, bridges, buildings and other programs.
Governor Pawlenty will release a revised budget proposal sometime in the next two weeks that will take into account both the new forecast and the federal stimulus funds. After that, legislators will start getting serious about constructing their budget bills.
Details of the forecast can be found at http://www.mmb.state.mn.us:80/forecast
Charter School Reform
The House K-12 Policy Committee has spent considerable time working on charter school reform legislation. MREA worked with MDE and others on a provision to create a three year moratorium on new charters in districts that have recently consolidated or dissolved. This language is opposed by the charter school advocate, but we were able to get this language amended into the charter reform bill. Many thanks are due to Rep. Sandy Peterson (DFL - New Hope) who authored and fought for this amendment.
Mandate Repeal
Thursday morning, the House K-12 Policy Committee will take up a bill (HF920) repealing several school mandates. However, none of the proposed repealers are of much substance. There are three controversial mandate repealers education management groups have worked on that may or may not get included in this bill. One is a temporary repeal of the 2% staff development set aside. Another is a repeal of the recently passed maintenance of effort requirement for school counselor, social work and nurse expenditures. The third is a repeal of the operating capital reserve requirements. All of these proposals are opposed by Education Minnesota, making it very difficult to gain traction on these issues.
Teacher Pension Reform Proposal
HF592 & SF506 are proposed to shore up TRA. TRA is currently funded at about 80% and this proposal would increase district and employee contributions in order to get back to 100% funding. The proposal would increase both employee and district contributions from 5.5% in 2010 by a half a percent from 2011 to 2014 meaning a 7.5% contribution rate by 2014. The proposal would also lessen the retirement penalties for those working 30+ years, allowing them to retire at age 62 with adequate pensions.
Remaining funds must be used to maintain state support for education appropriations at the fiscal year 2006 level. This could be problematic for Minnesota because the state bought back the rest of the 2003 payment shift at that time, which makes state education appropriations look artificially large ($607 million in shift buy backs in ‘06). Tom Melcher from MDE said they think the state can use the actual entitlements for 2006, which is an accurate portrayal of state education support in 2006. The state support requirement also throws a major wrench in the Governor’s current proposal to shift $1.3 billion in K-12 payments and property tax revenue because a new shift would make it look like the state was cutting education funds. MDE will try to make the same argument that the federal state support requirement should be based on entitlements and not appropriations levels.
The stimulus funds will go to districts based on their relative shares of funding under Title I, part A, of the Elementary and Secondary Education Act. According to MDE, allowable uses by Local Education Agencies include any activities under:
About $190 million of Minnesota’s education stimulus funds are through IDEA and include the usual maintenance of effort requirements. However, in the first year (fiscal 2010) districts can count 50% of the new federal IDEA funds as local funds. This flexibility goes away the next year and districts must spend the federal funds on new special education services. The “Tydings” amendment allows districts to obligate these funds over 27 months and expend them in 30 months. There is concern by state legislators and education officials that this will cause a two year rise in special education funds that the state and locals will have to support when the federal funds go away. Either that or districts will have to layoff newly hired special ed staff due to a drop off of funds. The new IDEA funds mean the federal share of excess costs of special education will go from 15.5% to 23.7% for the next two years and then will fall back to 15.5% in 2012. Districts can also spend 15% of these funds on Early Intervention Services (RTI model, etc) as a way to try to reduce special education pupil counts in future years.
The federal stimulus funds include $4.35 billion for State Incentive Grants that the Governor can apply for on behalf of Minnesota schools. The stimulus plan also includes $650 million Innovative Funds that districts can apply for directly. Eligible entities for the Innovative Funds include local education agencies or partnerships between a nonprofit organization and either one or more local education agencies or a consortium of schools.
Other Notes from Last Week
The legislation on increasing the threshold for reverse referendums from 15% to 30% cleared a key House committee last week. The House Government Operations Committee sent the bill to the Taxes Committee, where it will face its toughest test yet. Several legislators have expressed interest in helping districts keep their referendums through these tough times, but aren’t sure if the current proposal is the best way to accomplish this. Some have suggested new legislation that would essentially freeze current or expiring referendums through the next few years. Others have suggested that new referendum should be allowed to exist for at least half their approved life before a “no” group can attempt to reverse it.
The House Education Policy Committee reviewed legislation that would require students to attend school through the age of 18 (or until graduation). The legislation is being pushed by the Superintendent of St. Paul Public Schools as a tool to keep kids in high school and increase graduation.
The House Education Policy Committee also reviewed legislation requiring a half credit of physical education for graduation requirements. The bill was amended to allow a broad base of physical activities to count towards this requirement. Education groups continue to oppose this mandate.
The Week Ahead
The House Education Policy Committee is going to review charter school reform legislation this week. MREA is working with other organizations to push a new provision that would create a three year moratorium on a new charter in a district that is talking about cooperation, consolidation or closing a school building.
A House work group on mandate reduction will hear testimony from education groups on ideas for reducing mandates. The mandate reduction effort appears to be stalling as legislators get cold feet about reducing popular or well protected mandates. The federal stimulus funds for education also appear to have given some people a temporary sense of relief about the budget situation. However, the March budget forecast is around the corner, and the situation is expected to get worse.
The repeal of the Labor Day start date will be debated in the House K-12 Finance Committee on Wednesday. The bill to allow a two year moratorium on the start date is the one that will be debated this week. The bill containing the full repeal is in the House Workforce Development Committee, where it is unlikely to be heard from again.
The Senate E-12 Budget Division will review the Governor’s budget proposal this week. The Governor’s proposal is now in bill form (SF836) and will be reviewed at the Tuesday and Wednesday hearings.
2.16.09 Update:
Governor Pawlenty’s Teacher Prep and Mid Career Reforms
The House K-12 Policy & Oversight Committee reviewed the Governor’s recommendations on teacher prep programs. Under his plan, teacher candidates would have to pass entrance exams to get into prep courses in college. The committee listened to it, but didn’t take any action. During the discussion, one lawmaker questioned whether the Praxis test was useful in deciding who would turn out to be an effective classroom teacher. There had been some contact by superintendents who said that they have a good teachers in the classroom, but they can’t pass the test.
The House also heard about the Governor’s SMART program to bring mid-career professionals into teaching. This alternate pathway to licensure brought on some interesting questions from the committee. There were many different comments about whether or not this was a good thing, but the discussion will carry over into more committee hearings later.
Shared Services Discussed in House Work Group
The House is also looking into the concept of shared services, but there isn’t much support for the mandatory purchasing bill (SF10) that was introduced a couple of weeks ago. They have formed a working group, chaired by Rep. Marcia Swails (DFL Woodbury), to study the topic deeper and will meet weekly with education groups to see if there is anything productive the state can do on this front. Legislators are hearing from many organizations about the variety of cooperative purchasing and shared service opportunities all ready out there. MREA continues to focus on voluntary arrangements and financial incentives as the best way to foster cooperative programs.
Technology Funding is a House Priority
The House K-12 Finance Committee reviewed HF104 (Rep. Denise Dittrich, DFL Anoka) that would reserve Permanent School Trust Fund Revenue for technology purposes. The current amount of revenue scheduled to go to schools next year from this fund is $36/pupil. There is concern that districts will need maximum budget flexibility over the next two years and dedicating revenue at this time could be problematic. There is a growing sense among some legislators that the state needs to take a more active leadership role in driving technology investments as a way to improve student achievement and streamline district business functions.
Federal Stimulus
Both House and Senate education finance committees will review the impact of federal stimulus legislation on school budgets. The MDE will present the information this week. Passage of the federal stimulus plan will cause the Governor to rethink his budget proposal. A new budget forecast is scheduled to come out early March and is likely to show a worsening state deficit that will be in the realm of $6-7 billion for the next two years. It will be important to see how the federal education dollars impact the budget and if there are any potential pitfalls, like maintenance of effort requirements on new special education funds.
2.9.09 Update: Labor Day Debate Fires Up Again
Last week, the House K-12 Policy & Oversight committee heard two bills authored by Rep. Kim Norton (DFL – Rochester) that would either permanently repeal or temporarily repeal the statute requiring school to begin after Labor Day. The first bill, HF194, if a full repeal of M.S. 120A.40, and it was sent to the “graveyard” committee or Workforce Development and Higher Education. This committee and its chair, Rep. Tom Rukavina (DFL – Virginia), are staunch supporters of the current mandate.
The second bill, HF195, allows a two-year moratorium of the Labor Day start mandate and requires the Commissioner of Education to contract out for an economic impact study of the moratorium. This bill was sent to the House K-12 Finance committee, where there is much greater support for repealing the mandate. The best chance to keep the Labor Day repeal proposal alive is to keep it in the House K-12 omnibus bill and get it to conference committee. It will be difficult to do this as the tourism industry and the State Fair unleash their lobbying efforts to stop this from happening. Those who want the mandate gone will have to let their legislators know that this is a priority.
During the hearing on these two bills, Superintendents John Landgaard (Worthington) and John Curry (Rosemount-Eagan-Apple Valley) testified in support of local control. Superintendent Landgaard reassured the committee that 4H students would be excused to participate in the state fair if they desired. This is a concern some legislators have and you may want to clarify this with your own legislators. The resort industry testified about their very short season and the tough economic times they are experiencing. It was noted that there were about 3,000 small resorts in Minnesota in the early 1970’s and today there are only about 800 and this reduction took place with a post Labor Day start. It seems that the resort industries fate will be determined with or without the mandate. Other points made in favor of repealing the mandate include the fact that many students are back in late August for activities and they are more ready to learn at that time rather than early June.
Reverse Referendum Threshold Debated
During the same hearing on Labor Day, the committee also reviewed HF322 authored by Rep. Bud Nornes (R – Fergus Falls). The bill would raise the percent of voters needed to file a petition to place on the ballot the question to reduce or eliminate a district’s referendum authority from 15% to 30%. This legislation stems from the situation in the Frazee-Vergas district where, last fall, the “no” group came close to putting the question back on the ballot. The Frazee-Vergas district tried five times to pass their referendum, and it finally passed with almost 60% support.
The bill has a few more stops, but the plan is to move the legislation forward through the omnibus K-12 bill. The omnibus K-12 bill will have to make a stop in the Tax committee for review of levy impacts, and there is speculation that the Tax committee will try to take this out at that time. The Tax committee is less sensitive to the needs of schools and prone to side with what they see as taxpayer rights. This is another issue you need to talk to your legislators about, especially if they are on the Tax committee. The issue isn’t about taking away taxpayer rights, it’s about finding the appropriate threshold for a minority group to undermine what a majority of voters have already decided.
Budget Reality and Funding Miracles
The federal stimulus plan continues to move forward, but this last week a disappointing turn of events took place for education. The Senate is considering an amendment that would strip much of the education related funding out of the bill. The House bill includes significant funding for special education and school construction and remodeling. Education funding will be hammered out in a conference committee, and President Obama has indicated he wants a final version on his desk by February 16th (President’s Day).
In the meantime, Rep. Greiling is still pushing HF2, otherwise known as the “Minnesota Miracle.” The bill calls for a massive infusion of money into a restructured school aid formula. The proposal is supported by a wide range of education groups, but skeptics wonder how the state can afford this investment at this time. It’s also unclear about how much legislative appetite there is for restructuring the formula with no new money. The biggest threat to any legislation is if it creates “winners & losers” because legislators will run from a proposal that will cause funding harm to their districts. The Location Equity Index component of the bill also raises concerns among greater Minnesota legislators and school officials. As a total package, HF2 would drive significant dollars to greater Minnesota, but there are concerns about how the new plan will be implemented. There are also concerns that metro districts will still be able to levy significant operating dollars through referendum even after the state is paying for their higher costs of doing business through the proposed LEI formula.
Rep. Greiling’s desire for more education funding is in contrast to the harsh reality that Senate Majority Leader Larry Pogemiller (DFL – Minneapolis) is publicly talking about. Last week when the Senate Tax committee reviewed the Governor’s budget proposal, Sen. Pogemiller stated over and over again that education will be cut this year. That may be true given the on-going down turn in the economy, but we hope the Senate is also looking for a long term solution for education funding.
In the meantime, the legislature is planning on taking the Governor’s budget on the road. Look for a public hearing near you on Friday, February 20th. Look for more information on that, and as always, contact MREA with questions you have about legislative issues or about how to contact your legislators.
2.2.09 Update: Governor’s Budget Proposal at a Glance
Governor Pawlenty released his plan for resolving a projected $4.85 billion deficit for the next two state fiscal years. The proposal has already undergone legislative scrutiny and there’s more of that to follow. A lot of the scrutiny so far is tied to the traditional one-time fixes that don’t solve the budget in the long term. The Governor’s proposal to shift $1.3 billion of school aid and levy payments is a typical short term fix, but it doesn’t help long term. In fact, the state is required by statute to pay back the shift first before new dollars are put into the system, therefore delaying new investments that could expand early childhood programs, stabilize special education funding or replace lost equalization dollars. The trade off is that education is spared actual funding cuts. Like it or not, education funding is the credit card for the state, and according to a House legislative analysis, has been used twice a decade for the last 30 years. We had a shift in 2003 that was just paid back, so it appears we are due for the next one.
In the big picture, the Governor’s budget doesn’t solve the deficit long term and a projected $2.5 billion deficit exists for fiscal years 2012-13 under his plan. The proposal also doesn’t account for what many are expecting to be even worse news for the budget when the February forecast is released. The state economist has hinted that the deficit could grow to $6 billion or more by the next forecast.
E-12 funding was spared in the Governor’s proposal and he is recommending additional funding if districts and teachers participate in QComp ($300/pupil) and if students make reasonable progress towards meeting the standards (an additional 1-2% depending on the level of growth). If the deficit grows another $1 billion or more it will be next to impossible to retain any of these proposed increases. It will be very difficult under the current scenario given the legislative fight that will take place between E-12, Health & Human Services, Higher Education and Public Safety; all competing for a shrinking general fund.
QComp to Undergo Legislative Review
QComp plays a central role in the Governor’s budget proposal, but the program is about to undergo scrutiny this coming week when education committees hear from the Office of the Legislative Auditor. The OLA conducted a review of QComp and the report is critical of some aspects of the program, including the MDE’s implementation of the program. The MDE commissioned a QComp report on its own, and this report will be available for legislative review soon. Commissioner Seagren tried to reassure the House K-12 committee that this won’t lead to “dueling reports” and that the two reports will complement each other.
Type III Fix Faces Opposition from Governor’s Office (SF33 & HF116)
The current proposal to fix the Type III mandate would exempt the vast majority of school employees from needing a drug and alcohol test and a physical exam before driving such a vehicle. The Governor’s office apparently thinks this is too broad and is seeking to tighten the language in the bill, presumably to require some school employees not hired solely to drive a Type III to jump through these hurdles. One draft amendment would exempt most employees except custodial staff and administrators.
HF116 is scheduled for a hearing on Wednesday in the Transportation Policy committee. The Senate bill was moving forward until the Governor’s office raised concerns. The legislative authors want to forward the bill, but are also concerned about pushing a bill that could be vetoed. Stay tuned as we continue to work this out. At some point, we may need to drum up grassroots pressure toward the Governor’s office.
Reverse Referendum Requirements (SF314 & HF322)
Current law allows 15% of voters to sign a petition calling for a ballot question to reduce or eliminate an existing operating referendum. This voter authority was exercised this last fall, but the “no” group failed to properly file their petition. As a result of this situation, several school districts have requested a change in the statute governing reverse referendums. Legislation was recently introduced to raise the reverse referendum threshold to 30% of voters. The bill hasn’t been scheduled for a hearing yet.
Each week, MREA will update you on pertinent education finance and policy issues as they develop. Please feel free to contact MREA with questions about these issues or about how to contact your legislator.
1.26.09 Update: Shared Services Mandate Still Alive
Last Friday, a group of about 30 people from interested parties met with Senators Terri Bonoff and Gen Olson to address the proposed shared services mandate bill. The shared services mandate is contained in SF10, which includes provisions requiring the Department of Education to develop a preferred vendors list and requires every school to purchase the following from these vendors: school materials, supplies, tools and equipment for school facilities operations and maintenance; technology equipment and communication services; food services; and transportation services. The proposal doesn’t include a provision for emergency situations, but the Senators have acknowledged they need to include such a provision.
The groups present ranged from school district management to employee unions to food service directors and more. The groups were universally in favor of eliminating the mandatory nature of the bill. Several examples of cooperative purchasing arrangements were cited, along with the need to shop a variety of purchasing lists to get the best price. The Commissioner of Administration, Dana Badgerow, was present and talked about the state’s purchasing contract and how many school districts do a lot of their purchasing through them. The need for school districts to work with local vendors is a very important consideration and was mentioned several times. Senator Bonoff is working with TIES to do a survey of districts to find out their involvement in group purchasing.
The legislation also calls for MDE to contract with a consultant (Deloitte and Touch is pushing the bill) whose duty will be to identify expenditure savings in school district budgets. The consultant will be paid 5% of the projected savings and district aid will be offset by that amount, which is then paid to the consultant. This provision has been scrutinized many times.
As the conversation went on, the Senators said they want this legislation to provide flexibility. But there still remains a fundamental difference about what is or isn’t needed in statute. It was our impression that the organizations present made a strong case for not mandating the purchasing of any goods or services through one vendor list and, really, no need for new legislation in this area. However, the Senators are still interested in some kind of legislation citing the $5 billion deficit and the need to create efficiencies to spare the classroom from cuts. The deficit is the real driver of this legislation. The message MREA is communicating to legislators is that districts always spare the classroom if they can, and they will continue to do so with the revenue they get from the state and local taxpayers. What the deficit shouldn’t drive is cumbersome legislation that adds a bureaucratic layer into the purchasing of goods and services.
Type III Mandate Fix Hits a Snag in Governor’s Office
In late December and early January, Senator Rick Olseen worked with several education groups and the Highway Patrol to refine the Type III driver requirements that passed last session. The Highway Patrol offered up language that is satisfactory to school groups when it comes to the drug, alcohol and physical testing that has to be done. The new language contained in SF33 means that employees hired solely to drive Type III vehicles have to go through the drug, alcohol and physical requirements. Employees hired by the district for other reasons (teachers, coaches, etc.) don’t have to jump through these hoops. The legislation still requires the district to develop a policy on annual training and certification of drivers on basic safety issues.
The new legislation is on the move and has already cleared the Senate Transportation committee. However, we heard on Friday that the Governor has concerns with the new language and indicated that drug, alcohol and physical requirements should be required for anyone driving the vehicle. This is exactly what we are trying to fix with this new legislation.
Governor’s Budget Proposal out Tuesday
On Tuesday, Governor Pawlenty will release his budget proposal for fiscal years 2010-11. He has promised that it won’t contain tax increases, but it may contain some fee increases. The proposal is likely to be devastating to Health & Human Services programs and Local Government Aid. The Governor indicated in his State of the State address that he wants to hold education harmless. To do this means the remaining areas of the budget have to be on the chopping block. This, of course, sets up the usual budget game where pressure is put on the DFL majorities to either cut education to save some of the HHS programs or raise revenue to help with the budget deficit.
The Governor mentioned several items for K-12 education that we should see pop up in his budget proposal including:
His proposal will likely include his “Teacher Transformation Act” that would include minimum standards for entrance into educator preparation programs in higher education and an alternative pathway for teacher licensure for mid-career professionals. He also wants to require students to take at least one on-line course before graduating from high school.
1.20.09 Update: Federal Stimulus Package
Today, as we watch the inauguration of a new president and wonder about the issues of the day, there is a financial debate taking shape as congressional leaders craft a new stimulus bill. This recovery act has some incredible dollar figures attached to it including some for education. We will post the entire draft of the house bill and the house summary of the draft bill on our website if you are interested.
In the House version of the Economic Recovery Bill, the main features regarding education include:
(Information from Bruce Hunter, AASA)
It is probably too early to know exactly how this money will end up in districts hands, but the possibility of such is certainly good news in a time where that is in short supply. Supposedly, Congress is trying to act quickly on this bill to make an impact. After the events of today, we will have to watch to see how fast this does evolve. Sometimes congressional speed is more glacial than not, but these are unique times.
1.15.09 Update:
Governor Pawlenty just finished delivering his 2009 State of the State address to the legislature. In his address, he mentioned several issues of interest to K-12 education. Despite the significant budget shortfall, the Governor said he wants to increase the K-12 budget. However, he also said that all local governments that receive state aid should be put under a two year salary freeze. He said Minnesota needs to adopt a binding arbitration system for school district collective bargaining, noting that 40 other states use this process. Pawlenty touted the positive results QComp is having on teacher performance and student achievement. He said he essentially wants to mandate all districts into QComp. The Governor dusted off a funding proposal from 2007 that would pay districts an extra 2% in state aid if their students meet state standards or show reasonable growth toward the standards.
Governor Pawlenty brought up a few more items that he mentioned during MREA’s fall conference. He wants to pass a “Teacher Transformation Act” that would include minimum standards for entrance into educator preparation programs in higher education and an alternative pathway for teacher licensure for mid-career professionals. He also wants to require students to take at least one on-line course before graduating from high school. We will see the details of his budget proposals on January 27th when his budget is released.
1.12.09 Update:
Last Friday, the directors of the statewide education groups met with the Governor, Senate Majority Leader, House Speaker, Commissioner of Education, Asst. Commissioner of Education, minority leaders in both houses and some staff. The Governor had invited us there for a conversation about this upcoming year. He laid out the dire circumstances that we find ourselves in today. He asked how we can change the system to make it work because we can’t keep adding 3 to 5% increases every year. The Governor also said that the state can’t give out pay raises. He said that we can’t give out pay raises now suggesting that freezing pay, COLA, and steps and lanes was the right thing to do. He thought that boards and unions are going to have a tough time getting to that point and didn’t know if it was even possible. The Governor said he would be taking this position with state workers.
Senator Pogemiller said that they have a better working relationship with the executive branch than they have in the past, but also said that there is a general feeling in the Senate that they don’t see how education can be held harmless regarding funding. Speaker Kelliher thought we might get some federal help as part of the stimulus package, but it was too soon to know. She said that no one can make a pledge that education can be held harmless, but we need to work together to figure this out. Senator Senjem said that this is a difficult time, but we need to work together, tone down the rhetoric and look for common solutions.
There was an open discussion about ideas that we could share to impact our situation. These ideas ran the gamut of reducing the number of student contact days, cities and counties working with schools, testing issues, negotiations issues, statewide health insurance, special education, mandate reductions, raising revenue, and other related issues. The meeting ran out of time before it ran out of issues to discuss.
Senator Pogemiller said that there would be a mandate reduction bill in the Senate, and the groups agreed to get a list of mandates that they would like to see included. But the Governor said he was looking for the big issues that would help with our current state problems and the sustainability of our system. It will be interesting to see what comes from this meeting.
To most folk’s memory, this might be the first time all of the key groups - Education Minnesota, MSBA, MASA, MREA, AMSD, and SEE - have been brought together by the Governor. There was a feeling that we need to come to some common place to address these issues, but with the wide diversity of groups represented, that might be a hard place to find.
There is also a lot of confusion about what exactly the legislation means when certain services are listed, such as food service or transportation service. Does food service mean commodities and staff? Does transportation mean everything from fuel to buses to drivers? Does the legislation mean that districts can’t purchase goods and services from local vendors who don’t make the state’s “master list?”
The legislation also calls for a consultant to be hired by MDE that will be paid based on the projected savings they think can be achieved in each district. Not more than 5% of the projected savings would be withheld from a district’s aid in order to pay the consultant. This provision is very problematic and could lead to perverse incentives for a consultant to overestimate potential savings or identify savings that may be detrimental to an educational program. In other words, the bottom line isn’t the only consideration district management has to keep in mind when purchasing goods and services.
While the testimony and questions made for a bruising hearing on the bill, legislators are still interested in the shared services concept as a way to help deal with the state’s budget shortfall. The legislators on the committee made it clear that they want to build on, rather than to disrupt, the joint efforts that are already occurring. It’s not clear when the legislation will be discussed in committee again, but it needs a lot of work before it’s ready to become law.
By now, everyone is familiar with the dismal state of the American economy and the impact it is having on the state’s budget. The current budget forecast shows expected state expenditures for fiscal years 2010-11 at $37 billion, while anticipated state revenue well short of that at $32 billion. The revenue projection is rumored to get worse by the time the next budget forecast is released at the end of February. Closing the $5 billion (could grow to $6 billion) budget gap is the primary challenge for the Legislature and Governor. In recent comments, the Governor has reiterated to staunch opposition to state tax increases to be a part of the budget solution. By contrast, many around the legislature don’t see a way out of the budget mess without some new state tax revenue.
On January 27, the Governor will release his budget proposal to the legislature and public. In the meantime, legislative committees will hold overview hearings for new members to gain a basic understanding of the budget process and how various programs are funded. The key dates and events that guide the legislative session are these:
Given the difficulty of the budget situation, the Governor’s reluctance to raise revenue and the DFL’s reluctance to cut deeply into Health & Human Services and Education, many predict a special session that will drag on through the summer. Extra innings may be needed to close up this budget session, but the core issues will be on the table all along the way. It will be interesting to see the Governor’s budget proposal on January 27th without new revenue on the table. It will also be interesting to see what revenue options the DFL legislature and tax committees put on the table. What the public and education professionals should be aware of is even with some tax increases there will still be massive budget cuts and education may not be spared as the “sacred cow” this year. As the state economist Tom Stinson stated, “This is the worst budget crisis Minnesota has seen since World War II.” MREA and all of the education organizations will be fighting hard this session to make sure education is spared as much budget pain as possible. However, we need to be realistic about what the legislature and Governor can do for public education in a very depressing economic environment.
With that said, we still have a lot of work to do this session. Legislators are already talking about relieving local units of government from unfunded mandates. They are also talking about how schools can best utilize “shared services” in order to preserve core educational programming by streamlining administrative functions. We also have a handful of education policy issues we need to work on including:
This is by no means a comprehensive list of issues that education will face this session. New issues always spring up, and MREA is at the Capitol, on your behalf, ready to represent the interests of students in greater Minnesota. As always, we are here to assist you in navigating your way around the Capitol, giving advice on how to approach your legislators and providing weekly updates on legislative activity. Now, more than ever, your legislators need to hear from you about how to best preserve educational opportunities while we manage our way out of this economic mess.