Let's Go Old School.  

The O'Jays said it best back in the early-1970s with this big hit (although the song gets a little dark).  The state is flush with "Money, Money, Money."  The budget forecast released today shows a projected surplus of $7.7 billion.  The primary engine in the growth of the projected surplus is rapid growth in tax receipts.  They are up more than $5 billion since the post-session forecast.  We had been hearing all summer that tax collections across all categories (income, corporate, and sales) were rising, but I'm guessing the only people not surprised by the magnitude of the increase are those mapping the data in the Minnesota Department of Revenue and Minnesota Management and Budget.  The state also spent $364 million less than anticipated, with much of the savings being realized through lower than expected pupil numbers attending Minnesota K-12 schools.  Of the $7.7 billion, it is estimated that $3.1 billion is one-time money and $4.3 billion is on-going.

It's too early to determine what the actual battlelines between the two legislative bodies and the Governor will look like, but the Senate will likely push for considerable and on-going tax cuts while the House and Governor will likely present a mixed package that will include both tax cuts and additional spending.  It's worth pointing out that the budget target for the final E-12 omnibus bill that passed last session was around $200 million less than what the Governor had proposed and the House had passed.  With the formula taking center stage in the final bill, funding to help keep the special education cross-subsidy where it is and reducing the cross-subsidy for English Language Learners was not included and I wouldn't be surprised if those two items resurface during the 2022 session.

There may also be a chance for increased equalization for school levies.  The Governor proposed around $90 million of increased equalization for the local option, operating referendum, and debt service levies in his 2021 budget recommendations.  In addition, the Senate proposed about $25 million for increased equalization of the operating referendum.  As we've seen in recent news reports, property taxes have been rising, so there may be an appetite for education-related property tax relief to cushion rising residential and commercial property taxes.  I have been working with legislative staff on a bill that would provide considerable property tax relief by increasing equalizing factors for a number of school-related levies (principally those addressed by the Governor last session and the Senate in terms of the operating levy).  Sometimes ideas and ability to implement those ideas due to resource availability come together and while increased equalization would have budget tails extending into the next biennium, the optimism expressed in this budget forecast indicates resources would likely be there.

Below is Powerpoint delivered this morning by MMB.

Management and Budget November Forecast Presentation

We started off with the O'Jays and we'll close out with Buddy Guy and the video of another money-related song, the classic oft-recorded "Money,"

Minnesota Council on Economic Education Speakers Series Kicks Off Next Thursday.  Our good friends at the Minnesota Council on Economic Education are kicking off their speaker series for this program year with a presentation by Minnesota State Economist Dr. Laura Kalimbokodis next Thursday, December 9.  With the state budget forecast still fresh in everyone's mind, Dr. Kalimbokodis will provide solid insight as to how the Minnesota economy has performed during the pandemic and what may lie ahead.  The program begins at 4:00 PM and runs until 5:00.  The event is free and you can register using the link provided below.  I urge everyone to take advantage of this opportunity.  This is another example of the great opportunities to learn more about economic issues provided by the Minnesota Council on Economic Education.

Registration Link for Dr. Laura Kalimbokidis Presentation to MCEE

Election Wrap-Up.  It's been a week and I have pored through the election results, both for school levies and school board elections.  There weren't a lot of school board elections this fall as most districts have moved toward even-year, but given how school board meetings have generated considerable interest over the past year on issues related to school reopening and curricular matters, these elections were watched very closely.  There was not a lot of turnover in school boards this fall, as candidates critical of districts on the aforementioned issues of school reopening and curriculum often came close, but rarely won seats on the Minnesota school boards holding elections.  It is always difficult to tell what will happen in elections that do not coincide with state and national elections as turnout is often much lower, but with a few notable exceptions, candidates more closely allied with current district policies prevailed.  That said, the energy coming from new candidates certainly affected the discourse of the elections and the success that was enjoyed may well spill over into future elections.  It's too early to make a firm prediction, but it is my guess (CAUTION:  I made the same guess last year) that while there may be COVID spikes that will disrupt instruction in some districts, that will become increasingly isolated and school opening a year from now will look very close to what was once considered traditional (and will be traditional once again).

The debate over curriculum will likely continue, especially given the results of the Virginia Governor's race.  Former Speaker of the United States House of Representatives is often credited with the saying "All politics is local" whether he actually said it or not (the saying likely predates his use of the phrase), but increasingly politics is taking on a more national tone with both major parties generally promoting similar messages across the country.  Education has tended to be an issue that while having national importance (see Goals 2000, No Child Left Behind, etc.), results of local school board elections usually hinged solely on questions of policy developed and implemented at the local level.  The message surrounding education will likely resonate in national, state, and local elections in 2022 with heavy debate revolving around issues pertaining to curriculum.

Ballot questions fared well across the state for the most part, with the notable exception of SEE districts, which organizationally lagged behind the statewide passage percentage.  There were 52 operating levy questions put before voters, with 36 passing for a success rate of 69%.  Among SEE districts, eight districts went out for operating levies and only 3 prevailed (New London-Spicer split, but there larger ballot question passed).  On the debt service side of the equation, there were 49 questions, with 28 passing for a rate of 57%.  Eight SEE districts went out for debt service bonds or a capital levy and 4 were successful, again below the statewide passage rate.

The lower success rate for SEE districts once again stresses the need for greater levels of equalization, both for the operating levy and for debt service.  The capital projects levy should also be equalized.  The voters in SEE districts are supportive of their schools, but as we saw once again last week, the fact that low property wealth districts are at a disadvantage when going before the voters to seek additional funds.  SEE will be assembling and promoting a comprehensive legislative proposal during the 2022 legislative session to bring greater tax fairness to levy questions.  Stay tuned on that.

Pandemic Pupil Loss Revenue Adjustment Finalized.  Earlier this summer, Governor Walz announced that $29 million in Federal COVID relief revenue would be distributed to school districts throughout the state to partially address the drop in student counts during the 2020-2021 school year.  The count in terms of student loss has finally been verified and the revenue will be distributed through an informal adjustment in the declining pupil formula.

This is certainly a funding boost and it looked at several junctures that a funding adjustment wouldn't take place.  Bills to provide some adjustment were introduced during the special sessions that took place in the fall of 2020 and language was included in several bills--including the Governor's "summer" bill--discussed during the regular session.  As the session progressed, more attention was paid to what I would term "forward" funding that was largely divorced from the changes in attendance and service delivery resulting from the the pandemic.  

It's important to remember that the three Federal aid packages passed since the onset of the pandemic did provide considerable financial support to school districts, but as has been shown, the distribution of that revenue was very uneven throughout the state and in more than a few instances did not cover the additional costs incurred by districts as they reacted to changing circumstances.  The link below shows what each district will receive as a result of the Governor's action.

MDE Federal Relief Page (Scroll Down to Allocation for Enrollment Loss Support--10/4/21 under Federal Relief Funding Resources Subheading in Bold)

This adjustment does look backward and it is a needed first step.  The second necessary step is to mitigate the loss in compensatory revenue resulting from parents not filling out the required forms to qualify for free- or reduced-price lunch.  This is largely due to meals being made free for all students.  Because no paperwork was required, it was not submitted and, as a result, the student count necessary to establish a count for the calculation of districts' compensatory revenue was greatly reduced.  This has caused problems statewide and if the Legislature does return to funding discussions in 2022, this is one area that deserves considerable attention.

October is National Economics Education Month.  It has become increasingly important for students to understand how the American and international economies work.  Our good friends at the Minnesota Council on Economic Education (MCEE) provide quality professional development opportunities for K-12 teachers to help teachers implement the state's eocnomic and personal finance learning standards.  These standards are embedded beginning in elementary school and so few teachers have an extensive background in economics.  MCEE provides a variety of teacher-friendly programs at low or no cost to help teachers deliver the standards with confidence and fidelity.  In addition, MCEE sponsors student competitions.  For more information, follow the link below.

Minnesota Council on Economic Education

More Detail on Governor's COVID-19 Education Relief Package.  I wrote briefly last week about how the Minnesota Department of Education (MDE) will be distributing $132 million in COVID-19 relief funds that are available to the state through the American Relief Plan (ARP) that was passed at the Federal level in March.  Here are the major funding areas of the MDE plan with the dollar amounts attached to each program within each funding area.

Learning Recovery--$66 million

There are no specific programs mentioned in this funding category, but the plan states that the funds will go directly to public schools to support historically underserved students (HUS) with particular emphasis on students receiving special education services.  Funding from this category may mesh with the special education recovery language that was passed by the Legislature as part of the omnibus education finance and policy bill.  Districts receiving revenue must select evidenced-based strategies from the MDE-identified list in addressing student needs and aligned to the MDE priority list for learning recovery referenced here,  Schools are encouraged to engage community-based partnerships in meeting student needs.

After School Programs--$13.2 million

MDE will allocate funds to Ignite Afterschool to provide grants to community organizations and culturally-specific community organizations to deliver evidence-based after school programming.  

Summer Enrichment--$13.2 million

MDE will allocate funds for grant distribution with 50% of the funds going to community organizations and 50% going to culturally-specific community organizations.

School Support--$26 million

• $5 million for Multi-Tiered Systems of Support (MTSS)*
• $5 million for Full Service Community Schools*
• $4 million dedicated to expanding rigorous coursework for underserved students*
• $3 million for trauma-informed/anti-bias instructional practices training.*
• $3 million for non-exclusionary discipline training*
• $2 million for Life Skills/Transition Programs
• $2 million for teacher mentoring for new staff
• $1.5 million for ParentChild+ and Reach Out and Read.
• $500,000 Tribal/State Relations Training for public school leaders.

*Included in some form in the Governor's original budget recommendations but either not passed or funded at the level recommended by the Governor in the omnibus education funding and policy bill.

State Support--$13.6 million

• $6 million to prioritize data disaggregation
• $2 million to provide for a public engagement division in MDE that will support public school efforts to provide translated materials for families
• $2 million to provide non-grant administrative related supports attributable to needs arising from COVID

I have not accounted for all of the revenue here and more details will be forthcoming from MDE in the month ahead.  I know that they are planning a set of webinars and while those should be well-publicized by MDE, I will certainly follow up with notice on the blog.

The curtain has come down on the legislative session, but there's a lot to explain regarding the omnibus education funding and policy bill and the Governor's most recent initiative related to distribution of the ARP funds.  Feel free to contact me with questions or comments.

Governor Announces COVID-Relief Package.  On the same day that the Governor signed, sealed, and delivered the omnibus education funding and policy bill, he also released his plan for disbursing nearly $132 million in Federal aid that was passed through to the state as part of the American Rescue Plan, the third (and my guess final) Federal response to the COVID-19 pandemic.  As a refresher, the $132 million is the 9.5% of the initial state allocation that remains after 90% of the revenue was distributed to school districts based on their Title I numbers.  The Minnesota Department of Education retains 0.5% of the allotment to administer the program as outlined by Federal law.

The breakdown of the Governor's plan (this isn't a proposal, because the revenue is at his disposal--that rhymes!):

1. $66 million will be distributed to public schools to support students using evidence-based strategies. 
2. $13.2 million will be dedicated to Ignite Afterschool to provide grants for evidence-based after-school programs.  50% of the funds must go to community-based programs.
3. $13.2 million will be dedicated to summer enrichment allocated through grants with 50% going to community-based programs.
4. $26 million will go a variety of grant programs including full-service community schools, expansion of rigorous coursework, training for non-exclusionary discipline strategies, funding for Life Skills/Transition programs for students receiving special education, and other initiatives.
5. $13.6 million will be dedicated to building and reinforcing systems and structures with the Minnesota Department of Education to better support students, families, and educators.

It is a very ambitious program and dovetails with the overall general support that school districts received in the omnibus education funding and policy bill.  The thing that jumps out at me is that many of the Governor's initiatives that fell by the wayside during the negotiations to construct the final omnibus education funding and policy bill will find their way to students through this effort.  It appears that something akin to Multi-Tiered Systems of Support (MTSS), which promotes the use of evidence-based strategies to meet student needs in a comprehensive manner will be part of this plan.

Here is a link to the press released annoucing the plan.  There are links at the bottom of the release for further information.

Governor Walz Announces $132 Million in Federal American Rescue Plan Education Funds to Support Student Recovery from COVID-19 and Promote Success for Years to Come

 Education Bill Passes 65-0 on the Senate Floor.  I thought I would start things off with something upbeat to commemorate the occasion and I settled on ELO's Mr. Blue Sky.  The clouds that threatened the early days of the 2021 legislative session have vanished and a strong education bill has been passed and a government shutdown has been avoided (just in the nick of time).  While the overall budget target for the E-12 bill is not appreciably larger than recent history (especially when inflation is factored into the equation), if someone would have told me when the Legislature kicked off the session on January 5 that the E-12 budget target for this biennium would be $546 million, I would have definitely taken the under on a bet.  But the February budget forecast was up dramatically and that provided legislators in both bodies with the resources they needed to make their legislative statements.  

The initial targets for the House and Governor were higher on the spending side and were somewhat reliant on the passage of tax increases.  Across the partisan street, the Senate concentrated more on tax relief and, as a result, had much lower spending targets.  As has happened in the recent past in Minnesota's divided Legislature, this produced a collision where the sides met near the middle with lower spending targets and no tax increases.

The centerpiece of the omnibus education bill is clearly the 2.45%/2% increases in the basic formula for the next biennium.  As I have written before, when the budget target of $525 million was initially set (subsequently raised to $546 million), I didn't think there was any way that the 2%/2% initiative that a vast majority of education lobbying groups set out as their goal would be possible.  I assumed (and remember what people say about what assuming makes one) that the final bill would look almost identical to what was agreed upon in 2019, when the special education cross-subsidy hold-harmless was fully funded and the voluntary pre-kindergarten slots were protected.  This year, they opted to put money on the formula instead of funneling it toward maintaining the level of the special education cross-subsidy at its current level, which was standard practice prior to a couple of biennia ago.  Prior to that, putting money on the formula was the automatic default position and this bill returns to that approach.  There will be distributional effects as districts with special education cross-subsidies well above the state average would benefit from state action to hold them where they are instead of putting dollars on the formula.  Districts with lower cross-subsidies obviously benefit from the approach that this bill takes.

It is similar in the case of the 4,000 voluntary pre-kindergarten program slots that the bill protects.  If a district does not participate in this program, the formula would have obviously been of greater benefit, but in the absence of this funding initiative, the pre-kindergarten programs in participating districts may have disappearned entirely.  There is an impression that all 4,000 of these slots are in Minneapolis, St. Paul, and a few inner-ring suburbs.  That isn't the case as a number of districts well outside the metropolitan area are reliant on this funding.

Those are the largest moving parts in the bill and while neither side got all that they wanted, that is the nature of negotiations and the final bill is a very good piece of work.

A special session was probably unavoidable this year given the nature, timing, and amount of the Federal relief packages and trying to gauge the effects of fourteen months of reaction to COVID-19.  As a long time observor of the process, I think those were the major complications as opposed to other explanations that have arisen regarding how the legislative machinery has changed over time.  My guess is we'll know more next year when session kicks in again on January 31, 2022, and will likely run all the way to the constitutionally-mandated end date of May 23, 2022.  It will be an election year with a gubernatorial race and the entire legislature running in newly-drawn legislative districts.  Should be fun . . . maybe.

So in closing, as the current comes down on the 2021 special session, I think Kurt Vonnegut wrote it first and Nick Lowe sang it about a decade later:  So it goes.