Back to Charteria. The Senate E-12 Funding Division has been meeting about once a week since coming back from the holiday break and have been devoting almost all of their time to Senator Kathy Saltzman's SF 2716, a bill that would bring some fairly significant changes to Minnesota's charter school law. Perhaps the most profound effect would be allowing charter schools to own their own buildings. This is a major change and frankly, I don't know if it's that good an idea. The defense for the move is that the bar for charter schools owning their own buildings would be pretty high and would have to show that they have both a record of success and steady membership.

Thursday's hearing featured some very interesting testimony, especially from Center for School Change Director Joe Nathan. As most of you know, Joe has been one of the major promoters of education reform over the past three decades, being instrumental in changes like post-secondary enrollment options, open enrollment, area learning centers, alternative schools, and, the subject of today's hearing, charter schools. Joe hit some very firm, and needed, middle ground in his testimony, which has become extremely hard to do on the issue of charter schools. The gist of Joe's testimony is that choice, in and of itself, is not enough and that the choices available to students must be high-quality choices that lead to greater levels of achievement, with achievement being defined in broader terms that simply test scores. At the same time, choice for choice sake or for reasons of comfort have to be viewed less favorably.

The bill passed with an amendment that clears up some concerns from various parties, including the charter school community and Minnesota Management and Budget. It appears that the bill will be moving on its own and will not be part of the Senate's omnibus education funding legislation. HF 3176, the House companion to SF 2716, does not appear to be moving in the House, which makes passage of any charter school reform questionable this session.

Tax Day. It's April 15. Have you paid your taxes today? I paid mine and then I went over to the Capitol and saw Minnesota's Tea Party chapter stage its program. While more highly publicized than in previous years, I didn't think the gathered crowd was that much larger today than crowds in other years. Of course, the change in party of the White House's occupant usually brings out vibrant opposition from the other side (see protests against the Iraq War in reference to this effect). What really disappointed me is that I didn't see any really creative signs or anyone dressed up in Revolutionary War garb. Maybe next year.

I think what is puzzling veteran political types like myself is gauging what, if any, effect these protests will have on the November, 2010, election results. I don't think anyone ca,,n argue convincingly that the opposition to the Democratically-controlled Congress and President Obama is not spirited and that there are some vulnerabilities in the policies pursued by the Democrats. What isn't known is whether or not the Tea Party activities are actually bringing new people into the political system and whether or not individuals brought into the system by the Tea Party will remain motivated enough to follow through on Election Day.

It should be very interesting to watch develop. I think we'll know a lot more starting with the state political conventions that are convening over the next two weekends.

Always Nice to See Old Friends. I ran into former State Representative and longtime friend of SEE Bob Ness this morning. For those of you who are relatively new to the organization, I'll just say that former Representative Ness, who lives in Dassel, was a tireless supporter of funding equity who never shied away from the cause for more adequate and equitable funding.

It's Been Awhile. . .and Nothing Has Really Changed. Sorry about being absent so long. Things were hectic in March as the various education-related committees made their annual efforts to hear just about every education bill introduced during the session. These bills had their day in court and were taken back to their holding cells, where most of them will remain until next session. It's just been a pattern over the past decade or so to hear bills even though the committee has little, if any, interest in pursuing the proposed legislation seriously. Makes for some long nights and interesting discussion. Paraphrasing Shakespeare, "full of sound and fury, signifying not a whole lot."

We are now well beyond the third deadline, when it was anticipated that the omnibus education bills would be rolled out to the public. Not that it makes that much of a difference. If a committee goes past deadline, the bill that emerges from committee simply has to go to the Committee on Rules and Administration, where it is given a tardy slip and sent on its way.

The main reason for the delay is that the Governor and Legislature are waiting to see how the passage of the health care legislation will affect the state's bottom line for the remainder of this biennium. The Governor's budget proposal estimated that passage of the health care bill would improve the state's budget situation by $387 billion. How much that will change is anyone's guess. As someone pointed out to me the other day, the federal health care bill is in the neighborhood of a trillion dollars, which makes anything as innocent as a rounding error a pretty hefty chunk of change.

If the estimates hold up, K-12 will likely be spared from any cuts this year, but it will be a brief respite as things promise to be all shades of ugly for the next two biennia. One of the little-noted facts about the February forecast was that although the short-term budget picture got better, the long-term budget picture got worse. So, as Bette Davis once uttered in "All About Eve," "Fasten your seat belts. It's going to be a bumpy night."

The state political conventions have also thrown a bit of a monkey wrench into the late stages of the 2010 Legislative Session. The DFL convention will take place Friday through Sunday next week, on April 23 through April 25 with the Republican Convention being held the next week. Rumor has it (everything is rumor these days) the Legislature is going to work short weeks each of the next two weeks to allow legislators to attend their respective state conventions. I can only imagine there will be some mention of this as the Legislature "slacking off," but there really isn't a whole lot to do right now until the final federal numbers relating to the health care package are determined. Once that amount is gauged, things are probably going to move fairly quickly.

The National Scene. If you're looking for a preview of what next session might look like, take a gander at what is happening in New Jersey. Newly-elected Governor Christopher Christie cut nearly half a billion dollars in previously-approved aid to school districts in early March and then unveiled a budget that would cut schools by an additional $820 million. All of this has led to some fairly snarky goings-on and some nasty exchanges between the New Jersey Governor and the New Jersey Education Association.

One of the real ironies here--and it is a very sad irony--is that the New Jersey Supreme Court ruled in 2008 that after over three decades of wrangling in the courts and over a decade of trying to meet the requirements set out in the Abbott vs. Burke decision. Funding decisions made during the last year of former Governor Corzine's tenure and the first year of Governor Christie's tenure have totally eroded the promised gains of that litigation. As Arsenio Hall used to say, "Things that make you go, 'Hmmmmmmmmmmmmm.'"

I'll leave it at that for this entry. I will be more assiduous with my blogging as the Legislative Session winds down to its end. Again, never hesitate to give me a call if you want to talk about anything. I can be reached at 612-220-7459 and, of course, at my e-mail of brad.lundell@schoolsforequity.org.

Voyage to Charteria. Both the House and Senate spent a considerable amount of education-related committee time on charter school issues today. The Senate dove into SF 2716, a bill authored by Senator Kathy Saltzman (DFL-Woodbury) that would revise a number of provisions relating to state charter school law. The primary area of concern to legislators is the use of affiliated building corporations and the construction of facilities for charter schools. These corporations enter into agreements to construct facilities to be used by charter schools, who then pay the corporations with their lease aid. There are myriad problems with this arrangement, greatest of all is that the state has little, if any, oversight of the construction of the facilities.

This leads to the most controversial portion of the bill, the provision that would allow charter schools to own their own buildings. A strong case can be made that charter schools should not be allowed to do this, but allowing them to own buildings after meeting a number of criteria set forth by the state and under the direction of the Minnesota Department of Education, is clearly an improvement over the current situation.

From my perspective, the real problem with this whole set-up is that since the formal tie between school districts and charter schools was broken asunder when charter schools were given the opportunity to "shop" for authorizers and sponsors instead of having to work through the local school boards in which the charter school is located. Ever since, charter schools--and the unelected boards that govern them--have been making decisions with far less scrutiny than that experienced by school boards. This has led to a number of issues with financial mismanagement and the aforementioned building issues. Further, it's hard to say that most charter schools have delivered in terms of academic achievement.

The building ownership issue takes things one step further, as non-elected boards will be making decisions to own buildings without being forced to take the decision to a vote in the manner that a non-charter school district must. Voters in school districts stand as a protection in terms of local building decisions and assume the financial risk of the decision. What will happen in the event a charter school closes and leaves the state with the bill remains to be seen, but it's a question that needs to be answered before the decision on whether or not the building ownership goes forward.

There are other provisions in the bill, particularly one that would allow school districts to take the test scores from charter schools and include them with district scores for AYP purposes.

Link to SF 2716: http://https://www.revisor.mn.gov/revisor/pages/search_status/status_detail.php?b=Senate&f=SF2716&ssn=0&y=2010

The House dove into several bills, one of which would allow school districts to charge charter schools and private schools for unreimbursed transportation costs. While private schools receive revenue and charter schools receive the full basic formula amount (which includes money for transportation) to assist with transportation costs, often times the costs incurred by school districts in providing transportation to private schools and charter schools exceed the revenue set aside for it. Representative Jim Davnie (DFL-Minneapolis) is the chief author of HF 2910, a bill that would allow (but not force) school districts to charge for the excess cost of providing transportation to private and charter schools.

This bill clearly rankles the charter school and private school community, which is understandable. But the fact remains that there is a funding gap between the services provided by public schools in terms of transportation provided to private and charter schools. The issue that I brought up in my testimony for the bill was that this is another issue that could have been more easily solved if the categorical formula for transportation had been retained instead of rolled into the basic formula in 1995. The final chapter hasn't been written on this bill and it will be interesting to see how the discussion continues.

Link to HF 2910: http://https://www.revisor.mn.gov/revisor/pages/search_status/status_detail.php?b=House&f=HF2910&ssn=0&y=2010

Representative Mark Buesgens' (R-Jordan) HF 3003 was also discussed. Buesgens' bill would distribute revenue to schools based on pupils served as opposed to school districts on the basis of resident pupils. This would provide the $29 per pupil unit that each school district received last year to charter schools as well as school district. Districts with high numbers of charter school students would see their share of permanent school funding reduced. The revenue shifts for school districts is quite small except for Minneapolis, which would lose eleven dollars per pupil.

Link to HF 3003: http://https://www.revisor.mn.gov/revisor/pages/search_status/status_detail.php?b=House&f=HF3003&ssn=0&y=2010

A Turn-Down Day. If the title means anything to you, you're likely a baby-boomer like I am, although if you remember the song, it was about a summer's day and not one in late February with morning temperatures barely hitting positive territory. Don't worry about that, the name of the artist and a link to the rest of the lyrics will be at the bottom of this entry.

Anyway, back in zip code 55155 on Planet Earth, it was a quiet day at the Legislature. A number of education committees met, but most of the work was of a perfunctory nature. The bills that received the greatest amount of discussion were HF 3043, authored by Representative Jeremy Kalin (DFL-North Branch), a bill that provides for computer-adaptive assessments in reading and math that was heard in the House E-12 Policy Committee Wednesday morning. There was a lot of discussion of the bill and the bill is going to get more attention before a final decision is made as to whether or not to include it in this year's package of education policies. It was a part of the House version of the omnibus E-12 education bill last year, but the Senate had no comparable position and the provision was not included in the conference committee report that was sent to the Governor.

Here is a link to HF 3043. Note that there is a bill summary on the status page for the bill.

HF 3043: http://https//www.revisor.mn.gov/revisor/pages/search_status/status_detail.php?b=House&f=HF3043&ssn=0&y=2010

The other bill that was the subject of spirited discussion was Representative Andy Welti's (DFL-Plainview) HF 664, a bill that would create a model mental health curriculum for school districts. This bill is not a mandate that schools implement a mental health curriculum, but instead simply encouragement that schools do and instructs the Minnesota Department of Education, in consultation with mental health professionals, to put assist districts in putting together age-appropriate instructional materials dealing with mental health issues for use if the district chooses to offer courses relating to the subject.

Mental health issues are always a touchy subject in the education community. I don't think there's any disagreement that programs that pay attention to the mental health of students are important, but there's friction over whether school districts truly have any standing in these matters or if parents alone should be the primary arbiter in instances relating to their children's mental health. I don't believe the Welti bill steps over any line of parental control, as it merely encourages that school districts offer a mental health curriculum and there is no change in how the identification of children with mental health issues is handled. There is concern that there are not sufficient personnel resources at the Minnesota Department of Education to put together the model curriculum, as continued cuts to the department over the past two decades have created a manpower shortage there.

Here is a link to HF 664. Note, as was the case with HF 3043, a bill summary can be accessed from the status page.

HF 664: http://https//www.revisor.mn.gov/revisor/pages/search_status/status_detail.php?b=House&f=HF0664&ssn=0&y=2009

Crowded Capitol. Although the committee process was quiet today, a number of citizen-lobbying groups had their "day on the hill." Bikers (as in motorcycle riders) were there in their leathers. The Farmers' Union was in attendance. Students from the private college system were there. County library interests were also out in force.

When all of these groups are there at once, it makes me think "Are they all working on the same bill?" I'm trying to think of a bill that the four mentioned groups could agree upon. I suppose the bikers would agree to wear helmets only in people using the library had to use them as well. If teaching ag classes at the private colleges was proposed, that's something that the Farmers' Union could get behind. I'm not sure if bikers would agree to use ethanol in their "hogs," but the Farmers' Union would probably like to sell their corn for fuel as opposed to using it to feed their hogs. It can be a fun exercise, but I worry that one of the wild-eyed possibilities that rolls through my mind might actually by a real bill. Truth, after all, is stranger than fiction.

Trivia Answer. Yes, 1960's musiphiliacs. "Turn Down Day" was the second hit from the folkie band Cyrkle. Their first hit, of course, was "Red Rubber Ball," written by Paul Simon (of Simon and Garfunkel, not the former US Senator from Illinois).

Here are the lyrics to "Turn Down Day." Try not to hum it for the rest of the day, but it's an extremely addicting little ditty.

Turn Down Day:

It's much too groovy a summer's day

To waste running round in the city.

But here on the sand I can dream away

Or look at the girls if they're pretty.

Chorus:

It's a turn-down day

Nothin' on my mind.

It's a turn-down day

And I dig it.

There's nothing easier I can do

Than lying around doing nothing.

Repeat Chorus

Soft summer breeze and the surf rolls in

To laughter of small children playing.

Someone's radio has the news tuned in

But nobody cares what he's sayin'.

Repeat Chorus

Things that are waiting to mess my mind

Will just have to wait til tomorrow.

Repeat Chorus

Two-Fer Tuesday. I managed to take in two hearings at the Legislature today and both were interesting. The Senate E-12 Funding Division heard SF 2331 (Fobbe-DFL-Princeton) this morning. This bill was drafted by the Elk River School District and its Legislative Action Committee. Under the bill's provisions, any district that meets the following four requirements is eligible to receive $500 per pupil: (1) an increase in average daily membership of more than 4% between the 2001 and 2009 fiscal years, (2) a total increase in students of more than 2,900 over the same period, (3) having more than 50 percent of its tax levy dedicated to debt service, and (4) having a total tax rate in excess of 40 percent of its tax capacity. Only one district meets these criteria and that is Elk River.

I heard from several folks regarding the bill wondering if the bill had any chance of passing and what Elk River was thinking in drafting and introducing the bill. This bill, as is the case with any bill that requires a state appropriation, faces a steep challenge. As for the reasoning, like many SEE districts (especially those that are growing steadily), Elk River has a heavy debt service load and this load has become heavier as the value of the debt service equalization program has dwindled. The heavy burden borne by taxpayers in districts with high debt service effort often prevents these districts from generating considerable levels of revenue through the referendum levy. In fact, districts with high debt service effort are among the most tax-sensitive districts in the state.

SF 2331 helps make this case very clearly and the witnesses from Elk River were able to make that point in their testimony today. Further, the bill really got the committee engaged in discussing how property wealth disparities cause considerable differences in revenue. So, even though Elk River is not a SEE member, the bill they introduced produced some of the best discussion of SEE issues thus far in the session. Given the condition of the state budget, it is highly unlikely that state resources will exist to make considerable progress on equity issues this session, but that shouldn't stop any district or organization concerned about funding equity to take its foot of the pedal.

The House K-12 Funding Division heard Representatives Marsha Swails' (DFL-Woodbury) and Carol McFarlane's (R-White Bear Lake) HF 2840, this year's bill that is trying to create an environment that would encourage greater cooperation and shared services between units of government. Like last year's approach in the House, there is nothing mandatory forced on school districts in this bill. Unlike last year's bill, this bill creates a task force that represents a number of governmental units (both the labor and management sides) that will look at opportunities for greater shared services and the impediments to cooperation that currently exist.

The Senate will likely be discussing similar legislation as the session wears on and while it may not contain the mandated approach advocated last session, it will be likely different than the House version. Stay tuned.

Wild Week. It was a bit of the week that was at the Capitol last week as things got on the rail and starting moving. Both the House and Senate have now passed their versions of the bonding bill and that bill is now in conference committee. As has been reported, both legislative versions of the bill exceed the Governor's bill by about $300 million and unlike in previous years, the Governor has made it clear that he's not going to line-item veto projects from the conference committee report until it is pared down to his recommended amount. Instead, he's telling the Legislature that he will continue vetoing the whole bill until the Legislature approves a version that he is comfortable signing in total. Of course, the possibility remains that individual projects contained in the bill could garner enough Republican votes to override a gubernatorial veto, but that remains to be seen as the conference committee proceedings unfold.

In other big legislative doings, the Legislature passed the re-instatement of the General Assistance Medical Care program that the Governor line-item vetoed from the 2009 Omnibus Health and Human Services bill at the end of the last legislative session. I don't know what the land-speed record for a veto is, but the Governor's veto of this bill probably earned at least the Bronze medal. One of the first orders of legislative business this coming week will be an attempted override of that veto, but I would be surprised if the override attempt will be successful.

Needless to say, we've moved to the big kids' section of the midway and it's going to resemble Mr. Toad's Wild Ride from this point forward.

Speaking of Mr. Toad's Wild Ride. I got a phone call early on Friday morning from Denny Carlson informing me that I was quoted in the StarTribune. I went online and there I was talking about how SEE would oppose efforts to eliminate the referendum cap. I really found the story to be well-timed, seeing that just a day before I had expressed my expectation that we would be seeing this item discussed in the near future. While a new bill has not been introduced yet this session, bills that propose that the referendum cap be eliminated were introduced last year and those bills could always be heard again.

"The Song Remains the Same" isn't just the name of Led Zeppelin's live album/concert film, it's also pretty much the story of this issue since the referendum cap was first insituted in 1991. And it goes the same way for both sides. About 10 districts in the state want the referendum cap eliminated and the rest of us don't and the arguments have remained the same. If anything has changed, it's probably the fact that less districts want uncapped referendum capability than did back in 1988 when the Skeen lawsuit was filed.

I get the fact that some districts still believe getting rid of the referendum cap is a good idea that is useful to them. But the referendum, even though it is at its all-time high in total revenue generated at slightly over $800 million, is probably decreasing in popularity among districts. It's not that districts don't want access to referendum authority, it's just that this horse has probably been ridden as hard as it can be ridden. Further, if the cap were eliminated, it would give legislators the opportunity to say "Well, you can always pass as much referendum as you'd like." As stated above, that system would work for about 10 school districts.

Mid-morning on Friday, I got a call from WCCO radio asking me if I'd like to be on Dom Giardano's show on Friday afternoon. I responded that I'd go on the show, but I told the producer that I wondered why they'd want to discuss this issue on The Good Neighbor. The producer told me she thought it was a hot issue. I replied that--in terms I've used earlier in this entry--that the issue is less hot now than it was in 1991. I know that many of you listened to my approximately 3 minutes on the air with Giardano and I hope my points came across fairly well.

One point I wanted to make clear in the interview is that 5 of the 6 school districts grandfathered above the current referendum cap have capital projects levy, a couple of which are almost $700 per pupil. These levies are not subject to the referendum cap and aren't unequalized. While 25 districts (and several SEE districts) have capital projects levies, from the statewide statistics, it's obvious that property wealth plays a great role in who has these levies.

Needless to say, I don't think my interview threatened the Tiger Woods' coverage earlier on Friday, but it's always nice to be on the radio and I did enjoy the opportunity to state our side of the story.

Norm Draper has been writing some great education stuff (including the stories that don't quote me) thus far this sesssion, including Friday's article on the referendum cap. Great to see.

Referendum Cap Article: http://http://www.startribune.com/politics/state/84750237.html?elr=KArks:DCiUBDia_nDaycUiD3aPc:_Yyc:aUU

Governor Releases Budget. The picture at the right is one of a primeval forest and once again this year, Minnesota government finds itself in the middle of the darkest of budget forests with no clear paths cut into it and in possession of a broken compass. We are tripping through thickets, torn at by thorns, beset by troubles, lacking the equpiment of make any headway. . .okay, okay, okay, I guess I'm on the verge of wearing out the analogy, but I think everyone gets the point. We're broke to the tune of $1.2 billion for the remainder of this biennium and the picture for the 2012-2013 remains bleak (insert your own Charles Dicken's "Bleak House" metaphor here) as well, as we are staring at a $5.4 billion gap between revenues and expenditures.

The Governor has released his supplemental budget recommendations for the coming year and it's safe to say that large parts of state government aren't really feeling the love. We in the education community need to thank our blessings as we have been spared from the budget axe--at least for the first round--yet again and we need to thank our lucky stars for that.

That doesn't mean that we are out of the woods by any means. This is our high water mark and it's likely that the stars are going to have to line up perfectly for us to remain unscathed in throughout the session. The first obstacle to continued budget protection is the February forecast coming out in a couple of weeks. No one seems to know what the forecast will say in terms of how the budget situation has been changed--if at all--by last quarter's economic performance.

The only suggestions that Governor has forwarded for K-12 education is a formalization of the property tax shift and aid payment deferrals he enacted by executive order last June. He is seeking savings through more cuts at the Minnesota Department of Education (MDE) and is actually seeking some minor appropriations to facilitate data collection and rule-making changes. He is also proposing that collective bargaining results be collected and published in a consistent format by MDE.

Although K-12 funding is left intact by the Governor, he is suggesting some changes to local government aid that will raise property taxes and as SEE districts are located in areas that are more property tax sensitive, these changes will potentially have a greater negative effect in SEE districts. As I prepare for our legislative kick-off on Thursday, I have come across statistics that bear out our impression that the education funding system is getting more inequitable as it relates to property tax effort and the resulting yield in revenue generated through the property tax. Just something to watch.

The other problem that leaps out in the Governor's budget proposal is the fact that there is a budget hole of approximately $400 million that requires federal action in the proposed jobs bill if it is to be filled. In the absence of federal action that would extend the federal medicaid match, we will be staring at an additional $400 million in budget adjustments that need to be made.

All in all, it has not been a red-letter day for state government. While it only marks the starting line in the two-to-three month journey that lies ahead of us, the initial parameters have been drawn and we can now at least see into the gear box of the possible solution. Chilling and comforting at the same time.

Minnesota Management and Budget Link for 2010 Supplemental Budget: http://http//www.mmb.state.mn.us/

Bonding Bill Poised to Pass. The House is discussing the 2010 bonding bill this afternoon and after a recess for committee meetings, it will be passing its version of the bill this evening. The Senate passed the bill last Tuesday on a vote of 52-14 and it is expected that the House bill will pass as easily today, but that doesn't mean there won't be amendments and discussion.

The biggest difference between the Legislature's approach and the Governor's is the overall size of the bill. The Governor suggested a bill of about $700 million, while both Houses of the Legislature are flirting with a bill in the billion dollar neighborhood. Clearly the overall cost of the bill will come down and it appears that the Governor will insist on a total package from the Legislature that he can approve as opposed to simply line-iteming $300 million out of the results of legislative negotiations.

State o' the State. It's still not good, but the Governor is still required to give a speech and legislative leadership is expected to respond to his comments, so all parties went ahead with it. The Governor gave a solid speech, stressing the state's strengths as hope for the long term health of the state and also providing a list of policy suggestions he believe will help speed job creation and greater economic security in both the short and long terms. One area where it is difficult to disagree with the Governor is in the macro-sense that the paradigm of job creation and economic performance has changed and many of the tools used to remedy previous economic slumps need to be revisited. Whether or not the tools suggested by the Governor would deliver the level of job growth we need is certainly open to question, but it's hard to combat the notion that we will have to adjust to new economic assumptions.

Out-of-the-gate, the Governor's State of the State address contained good news for schools. The Governor explicitly stated that he will not cut revenue streams related directly to the classroom. What that means remains to be seen (and will be seen when the Governor releases his budget next Monday), but by pointing this out in this address, my guess is it means the glass is at least 90% (or maybe 73%) full. Not mincing words, it's great!

The Governor provided some very concise policy proposals relating to education that he believes would improve the system, especially for schools with achievement levels lagging behind the rest of the state. Included in these proposals are:

• Giving the mayors of Minneapolis and St. Paul full control over their cities' school systems. If that were not to pass, the Governor would create an Office of Turnaround Schools in the Minnesota Department of Education to take over schools not reaching prescribed levels of achievement.
• The "Teacher Transformation Act" that was proposed, but not passed last session.
• Reform of the teacher tenure system, providing for tenure reviews of teacher performance every five years.

I am sure the Governor will make more suggestions as the session wears on, but he once again showed his interest in education policy and a commitment to protecting classrooms in his message. Again, we're a long ways from here to there and we'll see how things hold up as the session continues.

I want to put in a good word for Lori Grivna, former Mounds View school board member who is currently serving on the Governor's staff as an education polciy advisor and liaison to the education community. Ms. Grivna has kept the education community in the loop throughout the Governor's budget development process and has worked hard to make sure the Governor is aware of our concerns. So thank you Lori.

Here is a link to the video presentation and print version of the Governor's State of the State Address: http://http://www.governor.state.mn.us/index.htm

More Charter School Kerfuffling. Is "kerfuffling" a word? Well, it is now. This time it's about segregation and some pretty solid evidence that the charter school movement is contributing to greater racial isolation in Minnesota and other states. I have linked an article written by Beth Hawkins from MN Post at the bottom of this item that outlines the issue. It's hard to argue with Minnesota Charter School Association Executive Director that there's something different about the nature of self-selected racial isolation that accompanies school choice and racial isolation that occurs as a result of geography or economic development patterns. But what about the results of racial isolation, regardless of its roots? That seems to be the more important aspect of the issue and it will be interesting to see how this issue plays out in the future.

MN Post Charter School Story Link: http://http//www.minnpost.com/stories/2010/02/11/15816/charter_school_report_finds_widespread_segregation_including_in_minnesota

January 15 Deadline Bill. State Senator Tarryl Clark (DFL-St. Cloud) and State Representative Larry Haws (DFL-St. Cloud) have introduced legislation that would provide school districts that do not settle with their teachers by the January 15 deadline an opportunity to re-coup up to 50 percent of the aid penalty if they can show the district is suffering from financial hardship.

The January 15 deadline has turned out to be pretty much a bad idea. It's pretty much a "one size, fits all" solution to a very complex issue that varies greatly from district-to-district. While this bill--SF 2569/HF 2890--doesn't totally eliminate the difficulties of the deadline, it would at least grant a partial reprieve to districts that are experiencing dire budget issues and refusing to settle at a level that basically ensures on-going budget migraines.

This is something to watch as we move forward. There is still talk about mandate relief to help in these times of tight budgets and this is clearly a mandate that merits discussion in view of the problems the state, and by extension local school districts, is facing in terms of revenue availability. The January 15 deadline was suspended in 2003 for the bargaining round pertaining to the 2004-2005 biennium and the situation is worse now than it was then, giving suspension of the deadline--even after the fact--a considerable level of merit.

SF 2569/HF 2890 Link: http://https//www.revisor.mn.gov/revisor/pages/search_status/status_detail.php?b=Senate&f=SF2569&ssn=0&y=2010

Full Day at the Capitol. It was a dawn to past-dusk day at the Capitol on Tuesday with a number of meetings. I'll give you the highlights. The House Education Policy kicked off the day, taking testimony from a variety of education interests on their policy goals for the session. Seeing we weren't talking about money (at least directly), my testimony revolved around the need to have no additional mandates and to re-visit a number of mandates currently in place and allow school districts more flexibility in facing their financial challenges. I also spoke in favor of the innovation revenue section of the New Minnesota Miracle proposed by Representative Greiling (DFL-Roseville) as a way to bring about last policy change.

The subject discussed at House K-12 Funding Division meeting was alternative education, with a presentation by the Legislative Auditor's office of their recent study "Alternative Education Programs." It was a very instructive meeting and the findings of the Legislative Auditor bear out much of what most have believed over the years in that alternative education works. While test scores in alternative programs still lags, growth models are showing that students in alternative programs--especially those receiving targeted services--often gain more than a year's worth of academic progress.

While the report does point out the need for increased monitoring of alternative education programs, the report left little doubt that alternative education programs are extremely valuable for a number of students (15% of the state's total student count is involved with alternative education for at least part of the school day). One of the report's recommendation is to allow school districts to offer targeted services outside of alternative settings. That would provide more instructional time for students who are at academic risk. Clearly, the need also exists to re-visit the 2003 decision to greatly reduce extended time revenue. If we are going to raise test scores, more instructional time-on-task should be made available to students. Hopefully, this report will help make that case easier to sell.

Kudos again to Judy Randall, Evaluation Manager at the Office of the Legislative Auditor, for putting together another solid report relating to an education program.

Alternative Education Programs Link: http://http://www.auditor.leg.state.mn.us/PED/2010/alted.htm

Great Breakfast. The University of Minnesota's College of Education and Human Development sponsored another of its policy breakfasts last Friday morning and I left wishing that they held them more often. Of course, the University, like every entity public and private, is facing more than its share of financial challenges these days and those challenges clearly prevent it from doing many of the things I am sure it would love to do.

The topic for the breakfast was "Benchmarking Teacher Quality for Policymakers in Minnesota." Dr. Karen Seashore Lewis, the Robert H. Beck Professor of Ideas in Education at the University of Minnesota, served as moderator for the session with a panel of experts consisting of Dr. Misty Sato, Assistant Professor of Teacher Development and Science Education at the University of Minnesota; Peter Hutchinson, President of the Bush Foundation; Dr. Valeria Silva, Superintendent of St. Paul Schools; Matt Kramer, President of Teach for America; and Garnet Franklin, Education Issues Specialist at Education Minnesota.

It was a very spirited discussion with a lot of great ideas thrown around by the panelists. I was especially impressed with Peter Hutchinson's comments regarding the need for innovation and the reluctance of those along the education spectrum to think "outside the box." I realize that's easier said than done (and Hutchinson would likely agree), but there is clearly a frustration by all of those operating in the current paradigm who are attempting to promote teacher preparation and maintain teacher quality that is starting to come out sideways in reactions ranging from recriminations to resignation (Oooh. Nice alliteration purely by accident.) In one of his comments, Hutchinson urged local school districts to make contracts with higher education institutions to promise to hire graduates provided they were trained in the manner that fit the needs of the district. Obviously, smaller districts would not have the leverage of larger districts in trying to go down this road, but I found the suggestion something worth discussing. I talked with Hutchinson after the breakfast and I hope to have him speak to SEE membership at either the April or May meeting.

Hutchinson was not the only interesting panelist. Each of the others brought interesting data into the discussion. Matt Kramer did a great job pointing out how Minnesota is not doing well in closing the achievement gap with a very good power point (that I am going to try and obtain). Valeria Silva's presentation, both in her formal comments and responses to questions from the audience, was electrifying. Her passion clearly came through in describing the challenges facing not only St. Paul, but the entire state. Garnett Franklin did an excellent job as well, pointing out the concerns of teachers and the need (and desire on the part of teachers) to be part of the solution.

All told, it was an excellent event. Thought-provoking and vital in its description of the challenges facing Minnesota and the nation in the area of teacher preparation and on-going professional development needs. Kudos to the University's College of Education and Human Development in continuing its outreach efforts. The University has a wealth of information on best practices and they are doing an excellent job of trying to get that information into the systems where it can be applied.

Dr. Rod Paige on Mid-Morning. I don't get to sit around and listen to the radio during the session, but I was fortunate to be in the car yesterday morning and caught former US Secretary of Education Dr. Rod Paige with Kerry Miller on Mid-Morning. Paige, along with his sister, Dr. Elaine Witty, have written a new book entitled "The Black-White Achievement Gap: Why Closing it is the Greatest Civil Rights Issue of our Tine." Although I couldn't listen to the whole interview while it was broadcast, I found Paige's comments that I did hear to be interesting.

To listen to the whole interview, go to this link: http://minnesota.publicradio.org/display/web/2010/02/08/midmorning2/

Session Begins. Is it just me or does anyone else think that it's ironic that the 2010 Legislative Session is kicking off the same week as the final season of the ABC drama "Lost?" Think about it. Castaways scratching for their lives on a magical island where strange and gruesome things happen. Conspiracies. Warring tribes. Time-travel (as in history repeating itself). Parallel universes. You name it. "Lost" is eerily similar to the legislative session. Thank goodness that the seasons for these items always comes to an end and usually with a cliff-hanger.


Thursday saw the beginning of this edition of the Minnesota Legislature and things got off to a smooth start. The biggest item of business was the massive number of bill introductions in both houses of the Legislature. The House saw 329 new bill introductions while the Senate saw 193. A lot of those bills are capital projects that are being heard for possible inclusion in the 2010 bonding bill.


There isn't much to report on the education front in regard to these bills introductions. Representative Mindy Greiling (DFL-Roseville) has re-introduced the "New Minnesota Miracle" as HF 2431. Representative Pat Garofalo (R-Farmington) has introduced HF 2508, which would formalize the school payment shift and early property tax recognition shift enacted as part of the Governor's unallotment measures taken just before the beginning of the 2010 fiscal year. There are currently no Senate companions to these bills.


SEE will obviously have great interest in both of these bills. We have worked hard on the "New Minnesota Miracle" and although revenue to implement this bill immediately clearly isn't available--and probably won't be for several years--it is crucial that the education community continue to make the case that the level and distribution of the current education funding formula is not sufficient to meet the needs of Minnesota's student population.


Representative Garofalo's bill would probably help make the best of a bad situation. No one likes funding shifts, but they are preferable to base reductions. Further, putting the shifts into statute would provide school districts with stronger planning ability. My guess is decisions on the Garofalo bill will not take place until the waning days of session, which should occur just about the same time frame as Kate will decide between Jack and Sawyer on "Lost."


Another bill of interest that has been introduced is HF 2645 (Greiling)/SF 2328 (Bonoff), a bill that would repeal MS 127A.46, the statutory provision that requires the Governor to withhold payments to school districts with sufficient fund balances as defined by law. This bill will also likely be part of discussions as the final budget balancing package is put together.

It's Ground Hog's Day! I guess it's kind of appropriate for the Legislature to be starting the same week as Ground Hog's Day. I heard on the radio the Punxsutawney Phil saw his shadow this morning, meaning he'll be rolling out of bed in six weeks. If his hole were in Minnesota, he'd be waking up just in time to see the Minnesota Legislature embroiled in the difficult task of reconciling a budget situation that is way out of whack. If I were Phil, I think I'd head down the hole for another ten or twelve weeks, just to make certain that the Minnesota Legislature is done with its work and it's safe to come out. Of course, if he remained too soundly asleep, who knows what he'd miss? Could be anything from a shifting of Ground Hog's Day to earlier in the fiscal year, a cut in ground hog-related services, or a property tax increase on his burrow. Be scared Phil. Be very scared.


Actually, the upcoming Legislative Session reminds me more of the movie Ground Hog's Day. Last session, we woke up to enormous budget problems. This year, we're waking up to. . .more enormous budget problems. Next year I'm guessing we'll be waking up once again to. . . enormous budget problems if recent projections remain accurate. My only hope is that the session this year ends with as happy an ending as that movie, although I doubt that we will witness much comedy--at least intentional comedy--during the 2010 Legislative Session.


Actually, I probably shouldn't be so gloomy (at least about the long term). The national fourth quarter economic growth figures reported an initial estimate of 5.7% growth. Obviously, with the economy being down so long, the first lurches upward are likely to be significant, but I'll take any growth at this point. While job growth remains uninspiring, a recent story on MPR reported that online job postings rose by nearly 9,000 listings between December and January, the largest increase since 2006. That same story reported that residential building permit requests are up from last year, but still dawdling well behind the halcyon housebuilding days of 2005 and 2006.


MPR Story: http://http//minnesota.publicradio.org/display/web/2010/02/01/jobopenings/Before

I close off the ground hog theme, I nearly drove off the road this morning when I heard that the People for the Ethical Treatment of Animals (PETA) actually lodged a complaint regarding the treatment of Punxsutawney Phil and suggested that a robot be used instead of a live ground hog for the annual media event surrounding Ground Hog's Day. PETA believes "it's unfair to keep the animal in captivity and subject him to the huge crowds and bright lights that accompany tens of thousands of revelers" to Punxsutawney every February 2nd. William Deeley, the head honcho of the club that sponsors the annual event says that Phil is "being treated better than the average kid in Pennsylvania," which means Phil's got it great or it really stinks to be a kid in Pennsylvania. At any rate, I think Phil probably enjoys lounging in his ground hog bachelor pad more than being pursued by the predators who'd be trying to order the Ground Hog Extra Value Meal in the wild. Further, I don't the the "P" in PETA will ever stand for "public relations." My suggestion to PETA is to head down to Haiti and help some of the Haitian wildlife displaced by the earthquake and while they are there, put their collective shoulder to the wheel for the people that live there as well.

Precinct Caucuses Tonight. I hope many of your will be attending your precinct caucuses this evening. Whether you're a Republican, Democrat, or Independenter (they need to have a contest to determine what they should call members of the Independence Party), it's important to have your voice heard and cast your vote in the gubernatorial straw ballot. Convention season comes early this year, as all three parties will have their endorsed candidates determined (if the delegates necessary for an individual endorsement can be garnered by a single candidate at the respective state conventions) by May. So go out and have some fun!

Some Thoughts on Martin Luther King, Jr. Day. I was reading this article from the December 17, 2009, issue of The New York Review of Books and came across this quote from an article by Dr. Tony Judt, professor of European History at New York University. The article was entitled "What is Living and What is Dead in Social Democracy?" It's a great article outlining two opposing mindsets regarding social organization and public investment: The Austrian School of Friederich Hayek versus the approach advocated by John Maynard Keynes.

The quote is as follows:

As in the eighteenth century, so today: by eviscerating the state's responsibilities and capacities, we have diminished its public standing. The outcome is "gated communities," in every sense of the word: subsections of society that fondly suppose themselves functionally independent of the collectivity and its public servants. If we deal uniquely or overwhelmingly with private agencies, then over time we dilute our relationship with a public sector for which we have no apparent use. It doesn't much matter whether the private sector does the same things better or worse, at higher or lower cost. In either event, we have diminished our allegiance to the state and lost something vital that we ought to share--and in many cases used to share--with our fellow citizens.

The crux of Judt's comments are aimed more toward the privatization of government services, but I found elements of the quote interesting and especially salient as I think of Dr. King and education. Dr. King helped extend the franchise to a broader range of Americans and education is the one service overwhelmingly provided by the state through local school districts. I don't subscribe to the theory that the state should provide everything or that it is infalliable in the services it does provide, but it is something that should ideally be an expression of our common identity as Americans, Minnesotans, or local government entity.

Looking ahead, as we tackle the budget challenge facing Minnesota, hopefully Dr. Judt's words will be heeded. Arguments as to what the size and scope of government are appropriate, but we should seek to strengthen our commitment to our shared identity in that process.

Further, education is the government service that all consume either directly or indirectly. Students obviously receive the direct benefit, but all of us are served daily by those who have graduated (hopefully) from some educational institution. Our future depends on a strong and effective education system. It is the one item provided by government that touches everyone and hopefully the year ahead will see a continued commitment from the state that will ensure that all children, as the SEE mission statement so eloquently states, "will have access to a high quality education regardless of where they live in Minnesota."

Enough pseudo-intellectual prattling. I'll be back again tomorrow.

Soo-prize! Soo-prize! Soo-prize! Gomer Pyle probably sums it up best here because I don't know if there's a more appropriate thing to say (or a more appropriate person--real or fictional--to say it) after finding out that there is yet another way in state statutes to mess up the cash flow of school districts. At Wednesday's Legislative Commission on Planning and Fiscal Policy, Commissioner Tom Hanson of Minnesota Management & Budget unveiled the latest discovery by the administration, a nugget put into law in 1986 in Minnesota Statutes 127A.46 as a temporary measure to deal with cash flow problems the state was experiencing. Rather than let the provision lapse, it was made permanent during the 1987 legislative session and has just remained there without garnering much attention. Until now, of course.

The thing that must be stressed here is that this is not a cut to the education funding base. That's about the only good thing that can be said about it. The provision requires that school aid payments be delayed if and when the state is in the position to short term borrowing problems burrowing into school district fund balances in the process. As in the case of the change in the aid payment shift, the state is once again using school districts to balance its cash flow issues. Not to sound cheeky, but why should we be expected to educate kids when we are doing such a good job as a bank?

As it has been explained to me, the state will likely withhold three payments to school districts (March 15, April 1, and April 15) and begin paying back school districts what they have borrowed from them, with full repayment of the borrowed portion made by the end of the fiscal year. This does not change the 73%/27% payment schedule that the Governor enacted through executive action last June. I look at it this way, much like Shakespeare placed a "play within a play" in Hamlet, state government is putting a "shift within a shift." Alas, poor cash flow. I knew it well.

Here are a few of the particulars. Dr. Tom Melcher has prepared an Excel worksheet outlining the maximum amount a district's cash flow could be affected due to this provision. The total revenue available to the state when the formula outlined in this provision is approximately $950 million. The state's cash flow needs are estimated to be about $550 million, or slightly less than 60% of the $950 million figure. Districts with fund balance per pupil of $350 or less are exempt from the provision and will not have aid withheld. About 90% of school districts have fund balances in excess of $350 per pupil (296 or 341) with the state average sitting slightly above $1,000 per pupil unit.

Fund balance politics have always been dicey for school districts. At least this is a great improvement over the fund balance reduction that was in place during the 1980s. Many of you may recall that fund balances could not exceed $500 per pupil unit without a district being subjected to a revenue reduction during that era of state budget woes. It is maddening beyond belief though that anyone would have the temerity to criticize school districts for carrying fund balances given the uneven path of school funding since 2001. Let's go over a quick review.

• 2001--Nice increase with $415/PU roll-in.
• 2002--Nice increase for second year of the biennium and no reduction after the economic downturn.
• 2003--Zero.
• 2004--Nada.
• 2005--Four Percent.
• 2006--Four Percent.
• 2007--Two Percent (Big money into special education).
• 2008--One Percent (Money into special education).
• 2009--Zilch.
• 2010--Zip (at best).
• 2011--Goose Egg in all likelihood.
• 2012--Flat-line.

In other words, more ups-and-downs than the biggest roller coaster at ValleyFair. Who could blame a school district for putting a little money away, especially given the latest economic downturn and the uphill battle a number of districts will face when it comes to renewing or adding to their referendum levies. But, smacko! Why bother employing sound financial practices when you are going to get punished for it?

I will be posting an abbreviated version of the spreadsheet prepared by Dr. Melcher on the SEE website, hopefully by this weekend. The spreadsheet will simply give two numbers: (1) a district's current fund balance per pupil unit, and (2) the maximum amount of reduction a district could suffer under MS 127A.46.

This latest fracas is making me so excited for the session to start (where's the sarcasm emoticon when I need it?). My guess is the relationship between the Governor and the Legislature will be about as cozy as the Leno-O'Brien squabble and is going to last a lot longer.

Rumblings on Formalizing the Shift. There's been a lot of whispering going around the last few days that the Governor is proposing to formalize the state aid payment shift and early property tax recognition shift that he implemented as part of his $2.7 billion in budget corrections after his administration and the Legislature could not come to an agreement at the end of the 2009 Legislative Session. The recent rumblings are undoubtedly a reaction to the temporary restraining order issued by Ramsey County District Court Judge Kathleen Gearin last week. As I reported yesterday, Judge Gearin's order has certainly thrown an element of uncertainty into the budget-balancing efforts of the last year and will cast a shadow over the additional efforts needed to balance

The Governor will be meeting with legislative leadership later this week. While I doubt a final agreement on formalization of the payment and property tax recognition shifts will be reached this far in advance of the Legislative Session, here's hoping that some progress is made toward an agreement.

Increasing payment shifts are never an optimum policy. Basically, the state is using school districts as a credit card when it employs these policies. However, formalizing the shift would provide school districts throughout the state with a better idea of what their cash flow will look like in the coming year and will avoid falling off a funding "cliff" in the event the shift would revert to 90%/10% automatically and leave all state funding other than the general education program in a murky state of "funded. . . .or not?"

Even if the payment and property tax recognition shifts are formalized, education funding is likely to go under the microscope for possible cutting to help solve the $1.2 billion budget gap facing the state for the remainder of the biennium. I will keep you posted.

The Stage is Being Set. We're one month away from the beginning of the 2010 Legislative Session, but the last week witnessed the issuance of a judicial decision that will likely frame the debate both leading up to the session and once it begins.

Judge Kathleen Gearin, chief judge of Ramsey County District Court, issued a temporary restraining order (effective November 1, 2009) that blunt, at least temporarily (it is a temporary restraining order after all), Governor Pawlenty's unalltoment powers. Judge Gearin's ruling relates to the Minnesota Supplemental Diet Aid program, which the Governor unalloted in late June, 2009, after the Governor and the Legislature failed to reach agreement on a budget accord for the 2010-2011 biennium.

You recall at that time, the Governor made a variety of decisions that either reduced or delayed state appropriations to a number of local governmental units and individuals. The primary effect on school districts was cash flow problems resulting from a shift to delay state aid to school districts from a 90% current year/10% subsequent year to 73% current year/27% subsequent year payment schedule. In addition, the governor also called for the early recognition of property tax revenue paid for education purposes, bringing the total amount of savings to the state to $1.7 billion in educational purposes. Again, it's important to be mindful that these actions do not constitute a $1.7 billion reduction to the education base. It represents a $1.7 billion delay in payments to schools that will still cause financial problems for school districts, but not anywhere near the extent of the total funding delay.

What does the Gearin decision mean in practical terms? As stated above, it is a temporary restraining order so it is unclear what would need to happen to make the ruling permanent. Further, the Governor plans to appeal the ruling, which may keep the original policy in place. Further, the Legislative Session starts a month from today and indications are that the Governor would like to formalize a number of his budget-balancing measures by seeking legislative approval. Of course, that will require give-and-take and that's a chasm that neither branch of government has seemed to successfully bridge over the past few sessions.

One comment from the Governor that I found a bit humorous was his assertion that the court was treading into the realm of the political with its action. To the extent that all policy has a political bent, he is absolutely right, but I believe what the Governor was referencing was that he believed the court was taking sides in a political fight. To the extent that the DFL House of Representatives' Finance Committee chair filed an amicus curiae with the plaintiffs, I suppose the Governor's argument can be be construed in that direction without being inappropriately stretched as well. At the same time, there can be no doubt here that the separation-of-powers doctrine that constitutionally defines Minnesota state government has been, if not totally subverted, less than ideally applied by the Governor's actions. Hopefully, the coming session will see a little more positive cooperation between the branches of government.

Stay tuned. I'm sure there will be more to this story.

MN Post Link on Gearin Decision: http://http://www.minnpost.com/ericblack/2009/12/30/14596/bulletin_judge_grants_order_temporarily_restraining_pawlentys_use_of_unallotment#comments_section

Session Preview. State Senate Majority Leader Larry Pogemiller (DFL-Minneapolis and Speaker of the State House of Representatives Margaret Anderson Kelliher (DFL-Minneapolis) were guests on today's Midday Program on MPR.

To listen to their comments, go to this link: http://http://minnesota.publicradio.org/radio/programs/midday/

For something more uplifiting, go to this link: http://http://www.hulu.com/. There's plenty there to lift your spirits!

When You Can't Sleep. . . I'm not recommending C-SPAN as a cure for insomnia, but I woke up early one day last week and watched a bit of the public affairs channel. The guest being interviewed on Washington Journal was successful Washington D.C. attorney and education reformer Kevin Chavous and I found Chavous' remarks interesting.

Like many reformers, Chavous isn't enamored with the current public education system and his rhetoric did feature several comments in the vein "it's all the fault of the teachers' union," but overall his tone was more realistic and congenial than many of parental choice and charter school advocates. Chavous clearly favors vouchers and touts Washington D.C.'s efforts in providing greater parental choice as proof that choice "works." The problem with Chavous' assessment is that he seems to base his opinion on the fact that parental satisfaction is higher in systems where there is a greater amount of choice. That is likely the case, but the same argument could be made that parents were satisfied with their schools--irrespective of achievement levels--prior to the development and implementatin of No Child Left Behind. This is a really slippery slope and to Chavous' credit, he did say that charter schools that are not performing well should be closed. That statement made me at least give me hope that there may some middle ground in the reform debate.

For more information on Kevin Chavous, check out his website: http://http://kevinpchavous.com/

Hanging Out in Room 15. If I ever write my autobiography, the title will probably be something like "Hanging Out in Room 15 . . . or Room 112 . . . or Room 200 SOB." I think you get the picture.

It's going to be a full day at the Capitol today, with the Senate Tax Committee meeting this morning to discuss the latest budget forecast and take a look at the Governor's proposed constitutional amendment that aims to limit (quite aggressively) state spending. They're currently discussing the budget forecast and nothing really new has been introduced into the conversation at this point. State economist Tom Stinson is describing (I imagine he can recite his testimony in his sleep for all the times he's had to repeat it) once again the condition of the state economy. It hasn't changed since last week and it's still not all that good.

It's always interesting to get inside the debate on issues like economic performance and the give-and-take of a legislative hearing provides some insight as to the dynamics--both political and in a policy sense--of the budget issue. Senator Julianne Ortman (R-Chanhassen) just asked a very pertinent question regarding Dr. Stinson's assertion that the economy is recovering. Dr. Stinson stated that inventories are low and that firms will have to increase hiring to re-build those inventories. Senator Ortman's point is that if unemployment remains high and individuals don't have the income to purchase products, why is there any reason for optimism as inventories will probably remain in a realistic position as they pertain to the realistic level of demand. Senator Ortman described her concern as a "chicken-and-egg" problem and it certainly is.

The commitee is now trying to determine the level of the Governor's unallotment powers as they pertain to transfers within the general fund. The Health Care Access Fund is losing revenue and if the Governor were to stop any transfers within the general fund to the Health Care Access Fund, care providers would be in a difficult position and would have to refuse care or recoup costs through another means.

We've moved on to the subject of the remainder of this fiscal year and the 2012-2013 biennium and the "real" level of the shortfall as it pertains to those budget periods. The point just made is that Legislature will have to take action to keep the budget shortfall projected for the next biennium at $5.4 billion. As I reported last week, the budget forecast assumes the unallotment of the General Assistance Medical Care (approximately $$920 million), but takes the K-12 funding shift back to 90%/10% from 73%/27%. In other words, the forecast is built on some assumptions that require legislative approval that may or may not happen.

The committee is now moving to discussion of the Governor's proposed constitutional amendment to limit state spending to the amount of revenue collected in the previous biennium. Senator Amy Koch (R-Buffalo) is the Senate sponsor of this amendment and is providing the background for the proposal. Senator Koch just mentioned that 30 states (18 through their constitutions and 12 through statutory guidelines) have limits on their revenue-raising and spending authority.

Senator Koch believes that this proposal provides more flexibility than previously-discussed approaches in this area, particularly the Taxpayers Bill of Rights (TABOR) that was enacted in Colorado.

At first blush, I'm not quite seeing the utility of this proposal. It would limit spending in the short-term and would also require that the Legislature enact tax increases prior to programs being implemented, which arguably would provide greater transparency. A few years back, there was an effort to require the Legislature to pass the tax bill before passing any of the funding bills and I am reminded of that effort in listening to the discussion of this proposal, although there is no question this proposal goes further by limiting the growth of the base level budget for on-going programs.

But, as Senator Bakk has just pointed out, limiting flexibility in the state budget may push funding needs to the local level and as we know, especially given the property tax disadvantages SEE members experience on a daily basis, the property tax is not applied equitably in terms of either burden or revenue generation. Further, there is always concern regarding amending the constitution and how constitutional changes may influence the ability of all branches of government to react to changing realities.

This proposal, or someting like it, is going to be discussed during the 2010 session. There's no doubt that the current economic slump and the resulting budget shortfall are going to spur a discussion of the future of Minnesota and the nature of government spending and how it fits into that future. So, as every good Boy Scout supposedly knows (I was a farm kid and hence a 4-H member and cannot speak with any measure of certainty on the matter): Be prepared.

The afternoon portion of my day at the Capitol was spent in the Senate Charter School Working Group meeting chaired by Senator Kathy Saltzman (DFL-Woodbury). The subject of the day was charter school lease aid and building decisions being made by charter schools.

The hearing provided a comprehensive look of not only how charter schools are making their building decisions and funding them, but also provided a thorough discussion of the funding tools used by other public entities--including the maximum effort loan program and the school debt service program--in the construction of buidings.

Belle Plaine Superintendent and SEE member Kelly Smith, along with Blooming Prairie Superintendent Barry Olson, provided background on the process used the public school districts on building issues, particularly the election process and the difficulty faced by many districts in gaining approval for bond issue elections. Gary Olson and Kristin Larson from Ehlers and Associates also provided insight on the process, giving a thorough description of how bonds are sold and how districts can get the best rates for these bonds. Mark Beltz, former Farmington school district Business Manager (and longtime friend of SEE) who currently provides consulting services to school districts and charter schools, outlined a proposal that would allow charter schools to own their buildings (currently prohibited by state law) and save the state lease aid payments in the process.

Charter school facilities has been a hot-button issue recently. A StarTribune article from about a week ago outlined how some charter schools have set up "building corporations" to construct and manage buildings and that this process, effectively skirting the prohibition on charter schools from owning buildings, has resulted in these corporations charging unwarranted fees.

Senator Saltzman has been working extremely hard on issues related to charter schools over the past two years and this is one area where reform is likely in the session ahead.

Below is a link to an article in Sunday's StarTribune written by Gene Piccolo, Executive Director of the Minnesota Association of Charter Schools, on the facilities issue.

StarTribune Article: http://http://www.startribune.com/opinion/commentary/78555452.html?elr=KArksUUUoDEy3LGDiO7aiU

MSBA Delegate Assembly. The 2009 MSBA Delegate Assembly concluded earlier today and it was once again an interesting exercise. Two proposed resolutions, both offered by SEE member districts, were of particular interest to me as the proceedings took place. The first, submitted by the Cambridge-Isanti School Board, sought to re-establish the general education levy, which was eliminated during the 2001 legislative session as part of then-Governor Jesse Ventura's "Big Plan."

Anyone who knows me knows my feelings on the elimination of the general education levy. It stands, in my estimation, as one of the dumbest single moves in the history of education funding in Minnesota. As a bit of historical backdrop, there are a number of culprits who contributed to this decision. Of course, it was former Governor Ventura and his august set of advisors who proposed the move in the first place. Add to this, the House of Representatives at that point in time made the decision to make the general education buydown part of its tax bill.

It's important to remember that the state was reaping the benefits of an economy that was enjoying peak performance in the late 1990s and had, in a stark departure from Minnesota's current fiscal position, considerable budget surpluses. This created a sense of security, false as it turned out, that the state was in a position to assume the close to $800 million in general edcuation levy with state resources. In fairness to the Ventura administration, it is important to remind ourselves that as part of the original recommendation to replace the general education levy with state revenue, it was suggested that the base for the sales tax be broadened to include clothing and services. This would have brought more state revenue into the equation and provided a cushion to ensure that the general education revenue amount could increase into the future.

However, the Legislature got a bad case of tax cut fever and the resulting decisions put state funding on shaky ground going into the future. Rumor had it that the state was already projecting a shortfall as the economy headed into recession and that was before the cataclysmic economic downturn that occured in the aftermath of the terrorist attacks in September of 2001.

The one thing that makes me bark a bit in retrospect is that Governor Ventura supposedly surrounded himself with hard-headed fiscal realists who were more than up to, at least in their rhetoric, the challenge of staring down legislators more interested in "politics over policy." Instead, the Ventura administration folded rather than stare down the Legislature, particularly the House of Representatives, when they refused to include the sales tax base-broadening as part of the final package.

The results of the decision to eliminate the general education levy proceeded to have disastrous effects. First, there was no state revenue available to provide increases to the general education program when the state economy took a turn for the worse. Further, the fairest levy that was applied across all property in the state at the same rate was replaced with greater reliance on the voter-approved referendum levy, which is both inequitable in burden and not applied across all school districts. Even though over 90% of the state's school districts currently have voter-approved referenda, the resulting per pupil revenue and tax burdens vary widely district-to-district.

But that's all in the past and I don't want to let my blood pressure get any higher, so I'll return to the MSBA Delegate Assembly. The resolution to bring back the general education levy failed on a vote of 56-62. Not bad considering the resolution wasn't aggressively "worked." While I'm a bit disappointed that the resolution didn't pass, any attention this subject receives is a bonus. Word on the street is that the Senate Education Committee might attempt to expand its consolidated levy proposal into something that more closely resembles, in both size and type, the general education levy.

The other resolution of interest was offered by the New London-Spicer School Board, calling for an increase in the equalization level for all current levies. This resolution passed by an overwhelming vote of 110-7. Of course, if resolutions passed by the MSBA Delegate Assembly automatically become law, we wouldn't have to worry about any cuts to any school districts, as spending for education would reach the mega-mondo-zillion level. What is heartening, however, is that the concept of equalization is something now etched deeply into the minds of school districts throughout the state. Now, if we can just get the Legislature to go along a bit more on this widely-shared belief we'll have a more adequate and equitable funding system.

Lawsuits? In the past couple of weeks, I've heard more and more from various (and unrelated quarters) that it may be time to consider a lawsuit against the State of Minnesota on the grounds that it is not meeting its constitutional duty to provide a "general and uniform, thorough and efficient" system of public education. Clearly, we've been on a funding yo-yo for the past decade, with four of the ten years witnessing frozen education funding formulas. Even in the years when we've seen an increase, the level of increases has not been enough to prevent program cuts or stem the continuing growth in the subsidization of special education expenses from school district general funds.

In another wrinkle, Minnesota's education funding system is also getting more inequitable. From documents we have put together, the gap between districts at the 5th and 95th percentile, in both raw dollar and percentage terms, have been steadily climbing (with a slight dip mid-decade) since 2001.

We all realize that lawsuits are quite an undertaking and it is instructive to look at what is currently happening in other states in the area of school funding litigation. One especially interesting case study is that of Colorado. In 2005, a group called Children's Voices sued the state of Colorado on behalf of 14 school districts. Both the district court and the Colorado state court of appeals ruled that the plaintiffs did not have standing to sue the state. In October, 2009, the Colorado State Supreme Court on a razor-thin 4-3 vote ruled that the plaintiffs do have standing and that the lawsuit will now be returned to district court to be heard.

Florida is another state that recently has seen the emergence of a lawsuit. Fund Education Now and Citizens for Strong Schools have joined several sets of parents in filing suit against the State of Florida in mid-November. This is on top of a lawsuit filed by the American Civil Liberties Union two weeks earlier. Florida currently ranks 50th out of 50 states in several education funding categories and a number of the states' districts have alarmingly high drop-out rates.

Needless to say, if Minnesota school districts decide to head down the litigation trail, there will be ample action in other states to both map strategy and judge prospects for success.

Links:

Colorado:

Children's Voices: http://http://www.childrens-voices.org/default.asp?PAGE=35

Great Education Colorado: http://http://www.greateducation.org/

Florida:

Fund Education Now: http://http://www.fundeducationnow.org/weekly-alerts/what-is-the-power-of-the-florida-constitution/

Citizens for Strong Schools: http://http://www.yesforalachuaschools.org/

Permanent School Fund Hearing. The Promoting School Trust Lands Subcommittee, chaired by Representative Denise Dittrich (DFL-Champlin), met this afternoon in the State Office Building. For those of you who need a refresher course, Representative Dittrich sponsored legislation during the 2008 session that changed the way that revenue generated by interest from the Permanent School Fund endowment is factored into the state's education funding system and how these lands are managed.

The public lands that comprise the generate the income for the endowment largely spring from a couple of sources, particularly the lands designated in each township for education purposes that date back to Minnesota's statehood. A number of these properties have already been sold, with the revenue going into the fund, but approximately 2.5 million acres still contribute to the fund. Most of the revenue now comes from leases and mineral exploration and mining rights.

The primary problem Representative Dittrich has sought to address in her original legislation and her subsequent involvement with the issue is how to generate greater revenue from this state-managed property. The Minnesota Department of Natural Resources currently manages these parcels and the general impression is that they are very conservative in the approach they use to promote these properties for revenue-raising purposes. Representative Dittrich's subcommittee has looked at how similar public properties are managed in other states and is trying to find a method by which greater revenue could be garnered through more aggressive promotion and investment. Utah is being studied as an example of how more aggressive management of state-owned property can generate considerably more revenue for school districts.

Given the condition of the state budget and the likelihood that we will see tight budgets for the next few years, any new revenue will be welcomed. Hopefully, Representative Dittrich's efforts will bear fruit. What she is asking the state's education community to do is become more aware of this issue and urge decision-makers to support a more aggressive approach to the promotion of these properties.

Charter School Issues Back in the News. Yesterday's StarTribune ran an interesting story on charter schools yesterday largely centered on the use of charter school lease aid to purchase bonds to construct buildings for charter schools. Loose regulation of these practices have resulted in the use of high-risk junk bonds and the questionable fees charged to charter schools by the companies helping them construct these buildings. Because charter schools cannot own property, they are in effect backed into these agreements because they have limited alternatives in seeking long-term facilities for their programs.

This and several other issues will be studied starting next week in hearings chaired by Senator Kathy Saltzman (DFL-Woodbury). The first hearing will be held on Monday, December 7, at 1:00 PM in Room 112 of the State Capitol.

Link to Charter School Story: http://http://www.startribune.com/politics/state/78286802.html?elr=KArksUUUoDEy3LGDiO7aiU

In the World of Hurt Department. The revenue projection is in and it is not good news. As I reported yesterday, whispers on the street had the revenue shortfall at about $1 billion and it came in about $200 million above that at $1.203 billion.

The primary reason for the revenue shortfall is the precipitous drop-off in income tax collections since the end of the 2009 legislative session. Income tax collections are $827 below the amount estimated in June which accounts for nearly 70% of the revenue shortfall. The bulk of the remaining shortfall comes in the form of less in terms of sales tax collections and capital gains taxes.

Falling wage levels--resulting from both unemployment and underemployment--are at the base of the problem with income tax collections. State Economist Tom Stinson believes that the economy has turned the corner and is performing increasingly well, but that even though Minnesota's economic performance overall was better than what was estimated in February 0f 2009, that performance did not translate into more jobs and/or higher wages.

All of this makes the 2010 session one that is going to be extremely painful. It's my opinion that if the shortfall had been half of this amount, the session would have been relatively short, as a number of relatively small adjustments could have been made to limp things through to the 2011 session. It would have been painful and tough, but it at least looked doable. At $1.2 billion, it no longer looks that way.

The forecast throws a monkey wrench into plans for a large bonding bill. The state's debt service is currently at 3.7% of total budget, well above the 3.0% guideline currently being used to estimate how much long-term debt the state should undertake. There is still sentiment to put together a large bonding bill, but it will be interesting to see if the Governor and Legislature can agree on both the magnitude and nature of such a bill.

As bad as the 2010 session looks, it's the 2011 session that's going to have legislators (and gubernatorial candidates) shaking their heads. Page 8 (the next to last page) in the Minnesota Managment and Budget document entitled "News Conference Handout" shows the painful prospects that lie ahead. The $5.4 billion projected shortfall is bad enough, but one look at the details shows that a gimmick-free, pre-unallotment, inflation-included budget shortfall would surpass $8 billion.

The $5.4 billion number does include the buyback of the aid payment shift to school districts from 73%/27% to 90%/10%, but does not include the nearly $1 billion in unallotment to the state's General Assistance Medical Care budget, the approximately $500 million in early recognition of property taxes, and $1.2 billion in inflation. It's hard to count the failure to fund inflation as a cut, but it would mean an erosion of purchasing power. Whether the Legisalture and the Governor can agree to include any or all of these changes as part of the permanent budget going forward to mitigate the size of the revenue shortfall for the coming biennium remains to be seen. I'll go out on a limb here and say the discussions are going to be political. It's also extremely important to remember that another federal stimulus package is highly unlikely.

State Economist Stinson did say that the economy is getting better and that while improved performance may not make the job appreciably easier for the remainder of this biennium, it may make things better for the 2012-2013 biennium. As he pointed out, however, higher economic performance resulting from the rebound are already built into those projections.

In other words, the day of reckoning is upon us to some extent. Senator Larry Pogemiller's (DFL-Minneapolis) comments in this morning's StarTribune clearly bear out that sentiment. The gimmicks are gone and we are now going to have to look at both the revenue and expenditure side of the state budget equation to come up with solutions that provide the services needed by the state's residents and also create greater stability in the system as a whole.

What does this mean for education? I don't really know and I don't think anyone does, at least at this point. I remarked today that we did dodge a bullet to a large extent last session, but we'll be dodging buckshot during the 2010 session. How much we get hit is anyone's guess, but it will be difficult not to at least be touched by more than a few pellets.

Links:

Managment and Budget Documents: http://http://www.doer.state.mn.us/forecast

MN Post Article #1: http://http://www.minnpost.com/stories/2009/12/02/13919/minnesota_faces_projected_12_billion_budget_shortfall

MN Post Article #2: http://http://www.minnpost.com/stories/2009/12/02/13936/as_budget_problems_mount_pawlenty_questioned_about_travel_outside_state

Star Tribune Article: http://http://www.startribune.com/politics/state/78317252.html?elr=KArksLckD8EQDUoaEyqyP4O:DW3ckUiD3aPc:_Yyc:aUac8HEaDiaMDCinchO7DUs

Let the Blogging Begin. It's the first of December so it's high time I dust off the keyboard and get back to blogging. It's been a somewhat uneventful interim, which is basically a good thing. With the mounds of economic bad news we've been seeing nationally (let me re-phrase that to an "absence of economic good news"), Minnesota's fall revenue forecast is expected to be a bad one with a possible revenue shortfall for the remainder of the biennium year in the neighborhood of $1 billion. Part of that is lagging revenue (at last report expected to be in the range of $240 million) and part of it may come through increased state expenditures, especially in the area of health care and income maintenance payment increases that would result from increased unemployment.

Another thing to remember is that although the picture for the remainder of this fiscal year (and by extension, the biennium) will likely be bad enough, things are really going to look ugly for the next biennium. The aid payment shift and property tax recognition shift are not in law and if they are not placed into the law, the problem for next biennium grows by $1.7 billion. Again, this does not affect the aid entitlement, but it does affect districts' cash flow and that more than one-third of Minnesota school districts have dramatically increased their short-term borrowing to meet their cash needs. Needless to say, tough decisions lie ahead.

I will provide you with the links to the revenue forecast documents when they are made available tomorrow.

Legislative Kick-Off Meeting. A group of SEE members met for a very interesting and comprehensive organizational meeting for the legislative kick-off event that is scheduled for Thursday, February 18, 2010, at the Kelly Inn just west of the State Capitol building. Things are obviously heating up for school districts and the problems are especially keen for SEE districts. If you have ideas for what you would like this event to entail, don't hesitate to contact either Deb Griffiths or myself.