Interesting Education-Related Blog I Happened Across.  While doing some research on-line the other day, I came across this blog--School Finance 101--authored by Dr. Bruce Baker, a professor in the graduate school of Education at Rutgers University.  Looking through the blog, there are some really interesting takes on a number of education funding and policy issues, including his latest post on de-ciphering the meaning of the recent National Assessment of Education Progress (NAEP) and Programme for International Student Achievement (PISA) test results.  The results of these tests have caused a lot of discussion and Dr. Baker puts forward a pretty thorough statistical analysis that provides a different perspective on the results than what has generally been reported.

Here is a link to Dr. Baker's blog:  http://schoolfinance101.wordpress.com/

Here are the links to the NAEP results discussed in Dr. Baker's blog:  http://nationsreportcard.gov/reading_math_tuda_2013/#/

PISA test results discussed in Dr. Baker's blog:  http://www.oecd.org/pisa/keyfindings/pisa-2012-results-overview.pdf

Happy Holidays to All!  I'd like to take the time to thank everyone inside and outside SEE who have offered support during 2013 and I look forward to continuing our important work in 2014.  Hope all have a safe and happy holiday season.

It Pays to be Optimistic.  Don't worry.  I remember the snickers from the audience at the September meeting when I said I was optimistic about the state's fiscal  picture (Me optimistic?  I think Deb Henton actually mentioned it in the meeting minutes.  That's how rare optimism comes from me.), but lo and behold, I was right!  There is that anecdote about the blind squirrel finding the acorn that is somehow appropriate here, but there's no question that for whatever reason, Minnesota's financial picture is pretty rosy as we head into 2014.

The November forecast (why is it called the November forecast when it's delivered in December?) came out today and it shows an approximately $1.08 billion surplus for the remainder of this biennium.  That means that after the school property tax shift is paid back and the $15 million owed to the state airports fund, there will be $800 million left on the bottom line.

It needs to be pointed out that approximately $250 million of the budget forecast "surplus" (how many times have I been reminded that it's not a true surplus, but an increase in forecasted--not actual--revenue) comes from lower than expected expenditures.

The Governor has stated that he wants an "unsession," but I think it would be hard for a legislature of any partisan stripe to walk away from an $800 million opportunity to cut some of the taxes enacted last session and/or spend on new or existing programs.  Where there is money, there is action and I expect there will be a tug-and-pull starting February 25 (the first day of the 2014 Legislative Session) over this little windfall.

What is even more heartening than the short-term uptick is the rosier picture for the 2016-2017 biennium, which shows projected revenue to be up approximately $1.5 billion.

Here is the link to the documents related to the budget forecast.  The most valuable document is the complete forecast, which is the third item down:

http://www.mmb.state.mn.us/critical.html

Global Agreement Reached.  The Governor and legislative leadership reached accord on the parameters of the budget for the coming biennium.  The plan features $2 billion in tax increases (income, tobacco, and probably alcohol) and a $475 million target for the E-12 education budget.  It also contains a temporary surtax on high income earners that will be used to pay back the school shift, a high priority for the House DFL caucus.

Here is a StarTribune article that outlines the agreement:  http://www.startribune.com/local/207121531.html

Home Stretch.  It’s the time of the year when I start dusting off the analogies to describe how the legislative process operates as it enters the stage when conference committees on the major budget and policy bills start to put together the final versions of these bills for final legislative approval.  As a refresher, it’s important to remember that each legislative body assembles its version of a bill and those bills, especially in the case of the major budget bills, are rarely identical.  This necessitates the conference committee process—a body composed of representation from both legislative bodies (including the chairs of the budget committee whose jurisdiction covers the bill)—in which the final version of the bill is developed through a set of compromises.  I don’t know if you covered this in your ninth grade civics class (or if you even had ninth grade civics), but a bill must pass both houses of the legislature in exactly the same form (and when I mean exact, I mean exact) before it can be sent to the Governor either for his signature or veto.

Enough with the civics lesson, it’s time for the analogy.  Think of the legislative session as you planning your Thanksgiving dinner.  You probably start out by thinking what you want to serve.  You think about how many people are going to be at dinner and how big a turkey you are going to need to buy.  You think about what you want to serve for side dishes and what recipes you are going to use.  Now imagine that another family member has decided to help out, but they have their own special stuffing recipe that you don’t particularly care for that they insist on using in the turkey.  You balk, but relent after agreeing with the family member that you will stuff the turkey with their recipe and your recipe.  You then buy the turkey and on Thanksgiving Day, you and your sibling stuff the turkey simultaneously with your respective recipes.

We’ve reached the time in the legislative session that the size of the turkey has been determined.  The tax increases agreed upon by legislative leadership and the Governor have allowed the purchase of a big old twenty-five pound Butterball © and over the next few days, it is going to get stuffed with legislative “ingredients,” namely provisions on spending and policy.  In the end, because both recipes have been used and cooked into one turkey, the meal will be identical for all the guests that arrive instead of having one turkey with one dressing recipe and one turkey with a different dressing recipe.

Have I tortured this analogy enough (please say “yes”)?  At any rate, the informal deadline for completion of the bill is Thursday at midnight and the negotiations will undoubtedly result in a package that contains both the House and Senate recipes.  As I said earlier, the package of tax increases that have been agreed upon will provide a sizeable budget target of $475 million for the conference committee.

As I said, the bill will likely be finished by late Thursday (May 16) and it will feature a commitment to voluntary all-day/every-day kindergarten and an increase (perhaps as large as 2% in each year of the biennium) in the general education formula basic amount.  There will also be a commitment to the early childhood scholarship program promoted by the MinneMinds coalition which looks to be about $40 million over the biennium.  In the policy realm, there will be a new assessment system that eliminates the 11^th grade MATH grad and replaces it with a suite of assessments that will hopefully ensure college and career readiness.  The House provision known as "Minnesota's World's Best Workforce," will also likely be part of the final package in some form.

Tax Bill.  The tax bill will also be put together over the next few days and if there is going to be increased referendum equalization (and there likely will be), it will be the product of those discussions and not the discussions on the E-12 bill.  Senator Rod Skoe has been promoting increased equalization all session long and it appears at this point that resources will exist to do something considerable in this area.  One possible negative that exists is the proposed referendum freeze that would prevent districts seeking to increase their referendum this fall.  While districts that have already passed a resolution stating their intent to put a question on the ballot in November are exempt from the freeze, there are many more districts that are likely interested in going before the voters this fall and this issue will have to be discussed and the restriction either eased or eliminated.  Another potential problem springs from the fact that equalization aid currently follows students to the serving district under open enrollment or charter school law.  This could prove extremely problematic, as an equalization increase would result in a district losing money.  Just more things to consider in the thicket-laden world of education funding.

Equalization Proposals Discussed in Tax Conference Committee.  The tax conference committee tackled the provisions in the Senate bill relating to referendum equalization and providing districts with little or no referendum levy with added financial support.  The Senate has altered its approach a bit from the initial proposal that was contained in the tax bill.  Instead of creating a new revenue category (early advancement revenue or EAR), the altered approach calls for making the first $300/PU a board-authorized levy equalized at a very high rate.  Districts with less than $300/PU in referendum authority could, by board action, raise that amount by board action.  Districts with more than $300/PU would have the first $300/PU converted to board-authorized authority that would not have to be renewed by voters.  This first tier, as stated earlier, would be equalized at a rate approximately 65% higher than the current first-tier equalizing factor.  It is difficult to gauge the exact increase in the equalizing factor because the Senate omnibus education finance bill radically changes pupil weightings and balancing the changes with the new "denominator" is inexact at this point.  Rest assured, however, that the new first tier of the referendum (now board-approved) is increased mightily.  The second tier of the referendum then becomes the revenue space between $300/PU and $775/PU and that is equalized at a rate above the current first tier equalizing factor of about 15%.  The third tier is the revenue area between $775/PU and the cap and the equalizing factor for that increment is well above that of the current second tier equalizing factor.  So equalization increases all around and the opportunity for districts with low levels of referendum revenue to close the gap between themselves and districts with high levels of referendum revenue.

Hard to tell where the debate goes after today's exchanges.  There is both support and skepticism coming from the House side.  House Tax Chair Ann Lenczewski, while sympathetic to the plight of low property wealth school districts, has concerns that the metropolitan area continues to subsidize low property wealth areas in the state through property tax relief mechanisms like equalization of school aid formulas and local government aid formulas.  The House position does little in terms of "yield adjustment" in its tax bill (it does increase referendum equalization in its education finance bill) and relies more on direct-to-taxpayer assistance through an improved property tax refund program.

The Senate is committed to accomplishing something in the area of school-related property tax relief this year and the current proposal is very strong.  I would urge all SEE members to contact their members of the House of Representatives and urge them to take a serious look at the Senate proposal.  While the Senate proposal does not recoup the entire erosion of the equalization program that has occurred over the past 20 years, it takes a big step toward righting the ship.

Education Conference Committee Begins.  The Senate/House conference committee that will work out the differences that exist between the two versions of the 2013 omnibus education funding bill began its work this morning.  While there are differences within the bills, there is nothing here that probably cannot be overcome rather easily once the budget targets are set.  The committee has spent the first few hours of the meeting going through the competing bills and highlighting differences that exist.  These differences are relatively minor and it's important to remember that both bills contain:

• A commitment to voluntary all-day kindergarten.
• Revenue going to the general education formula instead of special education.
• Similar provisions on student assessment largely based on the work of the assessment working group convened by the Minnesota Department of Education last summer.

For those of you who want to see the differences in the bill, here is a link to the side-by-side summary.

Link:  http://www.house.leg.state.mn.us/hrd/bs/88/HF0630.pdf

Deb and I will keep you posted on the conference committee's progress.

Tax Conference Committee Continues.  It's important to remember that the Senate tax bill also contains significant property tax relief for school districts and those provisions are on tap to be discussed at some point today.  I will keep you posted on this important matter.

Two Week Warning.  Two weeks from tonight, the 2013 regular session of the Minnesota Legislature will come to a close.  While there's a lot of work remaining to be done, it looks as though things will fall together fairly quickly after the tax target is determined by the conference committee on HF 677, the 2013 omnibus tax bill.  There is little doubt that taxes will be raised this session, but the obvious question is, "By how much?"  Both the Senate and the House have ambitious revenue increases in their respective bills, but the approaches differ dramatically.  Both bills raise state income tax rates for high income earners and make changes to the sales tax that broaden the sales tax base by taxing transactions currently not subject to tax.  The increased revenue generated by these changes in state taxes are used to:  (1) balance the state budget for the coming biennium, (2) put additional revenue into several areas of the state budget beyond what was included in the Governor's budget released in January, and (3) provide property tax relief.  The greatest departure that exists between the two bills is that the House proposes to implement a temporary income tax increase with the proceeds of the tax going to eliminate the property tax early recognition shift and set the education aids payment schedule at 90%/10%.

The tax conference committee has been meeting regularly, but no headway has been made on the major issues facing the panel, which leaves pretty much everything else in flux at this point.  The conference committee will be discussing the Senate's education property tax provisions tomorrow (Tuesday) evening.  As many of you recall, the Senate tax bill contains a $300/PU roll-in of the referendum levy (and equalizes the roll-in at an extremely high rate), increased equalization of the remaining referendum levy, and a re-establishment of the integration levy.  It is also important to remember that the Senate also buys down education property taxes in their version of the omnibus education funding bill by combining a set of levies that are either unequalized or equalized at a fairly low rate and reducing the total levy by $150 million.  The House has approximately $30 million in referendum equalization in their version of the omnibus education funding bill.

It will be a busy two weeks, but I have seen the Legislature cover more ground in less time, so it's not like the session has reached a point where things will simply be thrown together at the last minute.

Follow-up on Referendum Freeze.  As I've reported before, the Senate tax bill contains a provision that would prevent districts from going before the voters this fall to add to their current level of referendum revenue.  Senator Karin Housley offered an amendment on the Senate floor that would exempt districts that have already passed a board resolution outlining their intention to seek additional revenue through a voter-approved referendum to put a question before the voters this fall.  This will not exempt many districts (I can only think of one) from the freeze, but Senator Rod Skoe, the Senate Tax Chair, expressed support for making a larger exemption in conference committee with the only question being how to accomplish that.  I would urge all districts that are considering going out this fall to pass a resolution as soon as possible.  It is my guess that if the freeze survives (and there is a strong chance it won't), districts that pass a resolution by a certain date will be exempted from the freeze.  Everyone will have a pretty good idea of their revenue situation for the coming year and should be in a position to know whether (and how much) they will be embarking on a referendum campaign in the fall.

Anti-Bullying Bill Passes House.  After several hours of debate on a slate of amendments that reached double digits, the House passed HF 826 (the anti-bullying bill) by a party-line vote of 72-57.  There wasn't much new ground plowed in the debate, as questions over free speech, parental notification, and privacy were once again brought forth by those objecting to the implementation of a statewide anti-bullying policy.  Representative Jim Davnie, the bill's chief author, added an amendment to the bill that made clear the free speech rights of students and to not have those rights infringed upon in the implementation of the new policy. The difficulty will be--and this has always been the case--in determining the point at which speech becomes an exercise of opinion and morphs into harassment which then morphs into a pattern that would resemble--and may well prove to be--bullying.  The Senate is taking up its version of the bill--SF 783--in the Senate Education Funding bill tomorrow and it will then have to return to the Senate Finance Committee before hitting the floor.  The earliest the bill would hit the floor is likely to be Thursday and only then if the timing of the Senate floor sessions is such that it will accommodate the re-referral of the bill and the processing of committee reports.  I will keep you posted on the bill's progress.

Senate Passes Tax Bill on Second Try.  Monday's Senate debate on the omnibus tax bill made it seem like the entire proceeding was going to be anti-climactic.  I anticipated a session that would be fraught with amendments trying to highlight the proposed tax increases in the bill along with some of the other provisions.  Instead, the proceedings leading up to the first vote on final passage (note the word "first") was relatively quiet and straightforward.  As I wrote earlier, I was expecting a series of amendments on the income tax, cigarette tax, and the sales tax portions of the bill, but there was very little discussion of that outside of the Republican's macro-theme that given the state of the Minnesota (and national economies) and the fact that the projected budget shortfall has shrunk dramatically, tax increases of the size proposed by the DFL majority simply aren't needed and will be detrimental to the average Minnesotan and, by extension, Minnesota as a whole.

Nine amendments were offered, two being fairly technical amendments coming from Senator Rod Skoe, the Senate Tax Committee chair and the bill's chief author.  Three of these amendments were successful; the two offered by Senator Skoe and one by Senator Karin Housley that exempted districts that have passed a resolution to put an operating levy question on the ballot from the referendum freeze contained in the bill (more on that later).  The six amendments that failed came from a variety of sources and were offered by both caucuses.

There was also a motion to re-refer the bill to the Senate Finance Committee that failed.  The reason that motion was in order is that the tax bill contains a $200 million appropriation for proposed renovation of the Capitol area.  There is reluctance on the part of the Senate to pass a bonding bill, but a realization that the Capitol needs refurbishing and upgrades in a number of areas and the desire to contribute to that project and get it underway.  Bonding projects are almost exclusively handled in the Capital Investments Committee, hence, the discomfort on the part of some for allowing the bill to go forward without a review by the Finance Committee.

But the relatively brief debate (it was a couple of hours, but when one is expecting eight hours, two hours seemed like a welcome nanosecond) belied the drama that was to come.  When it came to the final vote, the bill failed on a vote of 32-34 (35 votes needed for passage).  7 DFLers (6 of them freshman senators) voted against the bill and one Republican voted for the bill.  One DFL senator was absent.  The Senate then recessed and both parties headed into private caucuses.

After something like this happens, it's off to the woodshed to put things in order and after a bit, the Senate re-convened, a DFL Senator who had voted against the bill moved to re-consider the vote.  That motion was successful and the debate ensued once again.  A motion was made to refer the bill back to the Tax Committee and that motion failed, setting up another vote for final passage.  This time, the bill passed on a vote of 35-31, with two DFLers changing their votes from "no" to "yes" and the senator absent from the first vote joining on the affirmative side.

As I mentioned briefly above, Senator Karin Housley offered an amendment that would exempt districts who have already passed a board resolution to proceed and put a question on the ballot this fall.  The bill contains a referendum freeze and this isn't the first time a legislative body has included a proposed referendum freeze (or levy cap) to accompany an increase in property tax relief (and the property tax relief in the Senate bill is considerable).  There is always a concern that property taxpayers will not see the effects of the property tax relief if local governmental units simply turn around and "levy back" the relief.  Of course, the difference between school districts and other units of local government is that school districts have to seek voter approval for almost all proposed levy increases while cities and counties can increase levies by council/board approval.  The problem--and Senator Skoe admitted this in his support of the Housley amendment--is that school districts often plan years in advance as to when they will go before the voters and how much they will seek when they do.  A number of districts have been in the planning process to go before the voters with a ballot question this fall and the proposed freeze would throw a king-sized monkey wrench into those plans.  While Senator Housley's amendment only exempts districts whose boards have already passed a resolution to put the question on the ballot, I believe the sentiment will be to allow more districts to seek voter-approved levies this fall once all the dust settles.  Whether that comes in the form of no freeze or a modified freeze remains to be seen, but I urge any district thinking of going out this fall to put their efforts on the rails and make certain that their legislators know of their district's intention.

Just an aside before I move to the next subject.  As I wrote earlier, I expected a raft of amendments yesterday accompanied by a protracted debate.  The debate was long enough, but amendments did not appear in the multitude I imagined.  It got me to thinking how much social media has changed the process.  It used to be that the public's knowledge of the tax bill and its effects were, if not limited, certainly not at the level they are given the resources available to the average citizen.  People who frequent blogs, go on websites of interest, or follow Twitter have a much greater appreciation for the contents of the bill that previous generations of legislative followers.  This gives opponents of a bill an expanded platform from which they can make their case against the bill either in real time or in a manageable window to get maximum play in the public.  In brief, it's probably a lot more effective way to transmit to interested parties their angle on what is happening in respect to a given bill.  Still, I expected a few more "gotcha" type amendments to insert into negative campaign ads (that's the paradigm in which I was raised), but I think the way the debate and subsequent reaction went down is an indication of how things have changed.

Here are links to news stories on the Senate tax bill deliberations.

MNPost:  http://www.minnpost.com/politics-policy/2013/04/minnesota-senate-needs-two-tries-pass-dfl-tax-bill

StarTribune:  http://www.startribune.com/politics/statelocal/205331721.html

Pioneer Press:  http://www.twincities.com/ci_23131157/minnesota-senate-vote-clothing-income-tax-increases

MPR:  http://minnesota.publicradio.org/display/web/2013/04/30/politics/senate-dems-turn-around-tax-bill-vote-after-initial-defeat


Education Conferees Set.  The conference committee members in the House and Senate have been named.  The House conferees are:

• Representative Paul Marquart (DFL-Dilworth), House Education Finance Chair
• Representative Carlos Mariani (DFL-St. Paul), House Education Policy Chair
• Representative Kathy Brynaert (DFL-Mankato)
• Representative Will Morgan (DFL-Burnsville)
• Representative Dean Urdahl (R-Grove City)

The Senate conferees are:

• Senator Chuck Wiger (DFL-Maplewood), Senate E-12 Division Chair
• Senator Patricia Torres Ray (DFL-Minneapolis), Senate Education Chair
• Senator LeRoy Stumpf (DFL-Plummer)
• Senator Alice Johnson (DFL-Spring Lake Park)
• Senator Kevin Dahle (DFL-Northfield)

A few observations.  First, because no Republican voted for the omnibus education funding bill in the Senate, there is no Republican on the conference committee in the Senate.  A number of Republicans voted for the omnibus education bill in the House and Representative Urdahl has several provisions that he authored that are in the bill.

Representative Brynaert and Senator Dahle have done a lot of work on the assessment issue in their respective legislative bodies and they will be the key players on meshing the two bills together on that issue.  The framework of proposed changes in the assessment system is the working group report from the Minnesota Department of Education that was released near the end of 2012, but there are differences that will have to be ironed out.

Senator Stumpf's presence on the conference committee (he is no stranger to education conference committees, having served as the Senate E-12 chair for eight years) is likely because of the Senate's position on the re-establishment of the general education levy.  One of the things to watch as the education and tax conference committees begin is which target will carry the proposed education property tax relief.

Senate Passes Omnibus Education Funding Bill.  It took about nine hours, with 33 amendments offered and debated (7 adopted), and a kerfuffle during the roll call vote, but the Senate passed the omnibus education funding bill on a vote of 35-28.  No Republican legislators voted for the bill and 3 DFLers voted against it.

The main objections to the bill come from those who believe the GRAD test (or some test with a "cut score")   needs to be retained instead of being replaced with the work of the assessment working group convened by the Minnesota Department of Education last summer.  If the Republicans in both the House and Senate have settled on an issue to attack the DFL approach to education this session, it appears that it will be the proposed changes in the student assessment system.

The other issue that was targeted by the Republicans was the proposed re-establishment of the general education levy.  Several amendments were aimed at either protecting businesses from the re-implementation of the general education levy.  Another angle taken by the Republicans in the criticism of this portion of the bill revolved around the question of why this subject is being handled in the omnibus education funding bill and not in the tax bill.  Of course, as I reported yesterday, there is significant education funding in the tax bill and the cross-pollination of tax policy and education funding policy between the two bills is puzzling (at least at this stage of the debate).

Another set of amendments was aimed at the decision to delay the implementation of the teacher evaluation process passed in 2011 by one year into next biennium, when funding for the program will also be made available under this bill.  Senator Branden Petersen, chief author of the teacher evaluation bill while serving in the House of Representatives last biennium, offered an amendment that would keep implementation on the schedule adopted in 2011.  He also offered an amendment that would have eliminated the practice of "last in/first out."   As in the case of the teacher evaluation process, Petersen was the chief author of that measure.  If you recall, that was passed by the Legislature but vetoed by the Governor.  These measures, like nearly every Republican amendment, went to the legislative graveyard today.

The kerfuffle I mentioned earlier in this piece came as the final vote was being taken.  Senator Chuck Wiger, the chief author of this year's omnibus education funding bill, gave an impassioned speech both urging support and answering Republican criticism as the debate was winding down.  It is generally the tradition that the speech of the chief author is the final speech given.  Because Senator Wiger's speech hit on several points raised by particular Republican legislators, those individual legislators wanted to respond to Senator Wiger's comments.  Instead of recognizing those Senators (which may have been simply an oversight), the presiding officer called for the vote to commence.  Because debate cannot continue during a vote, the legislators who wanted to speak took umbrage with the presiding officer.  For awhile, it appeared that the entire Republican caucus would boycott the vote, but because the Senate was "under call," all Senators present must vote unless they are excused from voting.  The vote took a bit longer to execute, but after a brief delay, all Republicans who were present voted (and all voted against the bill).  Just an interesting way to finish nearly nine hours of debate and discussion.

The bill will now be sent back to the House--it is important to remember that from this point forward the omnibus education funding bill will be HF 630--where the House will move to not concur with the amendments placed on the bill by the Senate (which is in effect the Senate substituting its version of the bill for the House version).  That will result in the naming of conferees in both the House and Senate with that decision being announced tomorrow.  The respective staffs in the House and Senate will likely spend their weekend putting together analysis of each bill and side-by-side documents comparing the two bills with the conference committee beginning to meet formally next week.  It is almost the first of May (I couldn't believe it when I looked at the calendar), which leaves us just three weeks before the Legislature must adjourn.

There are a lot of differences in the overarching approaches taken by the House and Senate, but there really isn't a lot of difference in the major initiatives undertaken in each bill.  Both bills have voluntary all-day kindergarten, have stressed the basic formula over the special education formula, and contain the changes to the assessment process.  The big difference is in the overall budget target and the fact that the Senate has put so much property tax relief in their education funding bill.  In other words, once the overall budget targets are set, there probably isn't that much to fight about and the negotiations should be relatively smooth.  There is a rumor that the Governor is going to push hard for money to go into his proposed special education changes and that could complicate things, but that is merely a rumor at this point.

The Senate is taking up the omnibus education policy bill tomorrow.  Unlike the House, the Senate is passing its funding and policy bills separately.  How that works when conference committee commences will be interesting.

Omnibus Bill passes House.  After an extended floor debate which saw multiple amendments offered (with very few--and none for which a roll call was requested--adopted), the House passed the omnibus education funding bill by a vote of 80-53.  8 Republicans joined the entire DFL caucus in supporting the bill.  Most of the debate centered on the work of the assessment working group that met last summer to develop a new assessment system for Minnesota's high school students.  There has been a concerted effort over the past few weeks by opponents of the report (especially the elimination of the GRAD) to heighten concern among the public regarding the proposed changes and it showed in the buttons with the slogan "Don't Dumb Down the Diploma" worn by a number of legislators and the number of amendments related to the proposed assessment changes.  It's obvious that the DFL members took caucus positions on the amendments, keeping the more contested amendments off the bill.  Some majority members "walked" on a few amendments, but there was sufficient opposition to keep the bill "clean" (at least in the eyes of the majority).

Here is a link to the roll call votes on the amendments and the bill:  http://www.house.leg.state.mn.us/votes/votesbynumber.asp?billnum=HF0630&ls_year=88&session_number=0&year=2013

Tax Committee Takes Testimony, Amends Tax Bill, and Sends it to the Floor.  SF 552, the Senate version of the omnibus tax bill, was discussed in the Senate Tax Committee today.  Milaca Superintendent Jerry Hansen testified in favor of the Education Advancement Revenue program that is part of the bill.  As described yesterday, the Education Advancement Revenue will bring districts with less than $300/PU in referendum revenue up to that amount and will swap revenue from the newly-created component with referendum revenue in districts with more than $300/PU.  In other words, new revenue for districts with less than $300/PU in referendum revenue and tax relief for districts for a vast majority of districts with referendum revenue in excess of $300/PU.

In another matter, the tax bill was amended to include the integration levy that was not included in the Governor's budget (but was subsequently made a part of the House omnibus education funding bill).  The Senate omnibus education funding bill did not include the integration levy in its work.

Senate Education Funding Bill Expected UP Tomorrow.  Speaking of the Senate omnibus education funding bill, it is expected to be debated and approved tomorrow on the Senate floor.  The Senate is covering a number of bills this week and protracted debate on any of them could slow things down and prevent a timely approval of the bills.  It is my guess that debate on the Senate bill will center on two sets of provisions:  (1) the Senate's re-establishment of the general education levy, and (2) the assessment section that is similar to that of the House.

Senate Tax Committee Adds Education Funding Provisions.  When the Senate Tax Committee unveiled the Senate Omnibus Tax Bill--SF 552--this morning, it contained several education funding and education tax relief measures.  Senator Rod Skoe, the Senate Tax Chair, was the chief author of SFs 177 and 526  As a brief refresher, SF 177 was the bill introduced in January that doubled the referendum and debt service equalizing factors.  SF 526 was the bill that created a new funding category called Educational Advancement Revenue (EAR) that would roll in $300/PU of referendum revenue into this new category and provide districts with less than $300/PU in referendum revenue the difference between their current referendum revenue per pupil and $300/PU.  EAR would be equalized discretionary levy.

SF 552 contains much of SF 526, making EAR part of the omnibus tax bill.  The equalization factor for EAR would be $785,000/PU in referendum market value.  It's important to remember that the Senate changes the pupil weightings considerably in its bill, so it is difficult to compare this proposed equalizing factor with current law.  In terms of a "back of the envelope" calculation, it looks like an increase of 45% in the equalizing factor.

The EAR mechanism also reduces the referendum cap by $300/PU and sets a new referendum cap at 25% of the general education formula amount.  I have been unable to discern whether or not the districts currently "grandfathered" above the cap would remain above the cap.

There were no increases in the equalizing factor outside of the increased equalizing factor for EAR.  This is very disappointing to me--and I suspect a lot of SEE members--who were hoping that SF 177 would have been the centerpiece of the Senate's heralded education property tax relief proposal they have been promoting all session instead of the decision to re-establish the general education levy that is currently in SF 453, the omnibus education funding bill.  There is what I would call "backdoor" increased equalization in SF 552, as EAR is equalized at a higher rate than the first tier referendum is.  Further, the first tier remains at about its current law level, meaning that the sum of EAR and the first tier adds approximately $300/PU in heavily-equalized revenue.  The total price tag on EAR and the equalization is $83.6 million, so it is a heady amount.

All that said, higher referendum equalizing factors are still preferred to the general education levy, as the re-establishment of the general education levy does not address the property tax "yield" disadvantage experienced by low property wealth school districts.  While low property wealth school districts may get more relief in the aggregate compared to high property wealth school districts in the process that re-establishes the general education levy, this relief evaporates faster than it does in high wealth districts if and when the low property wealth district attempts to turn the relief into new referendum revenue in a subsequent election.  Policy makers who operate at the junction of education funding and property tax policy often forget that equalization is both property tax relief based on the relative wealth of the school district and "yield enhancement" also based on the relative property wealth of the district.

So, disappointments aside, SEE marshals on.  It is difficult to say how the education property tax proposals proceed.  The House Education Funding bill has an increase in the equalizing factor which provides approximately $30 million in relief and indexes the equalizing factor into the future.  The House omnibus tax bill contains no education property tax provisions.  As I've just outlined, both the Senate omnibus education funding and tax bills contain education property tax relief proposals.  All these provisions will likely find their home in either the tax bills or the education funding bills and be negotiated as part of those packages.

I will keep you posted.

There are one other interesting education property tax proposals in the Senate omnibus tax bill.  Under the bill, there would be a referendum freeze this fall.  In other words, no school district could seek to increase their referendum this fall.  Districts would be able renew existing levies, but would be limited to that amount.  Obviously, this would put a number of districts at a disadvantage, as a number are seeking to increase their levies.  There may be ways around this for these districts, but no alternative paths have been suggested at this point.  My reason for pointing this out is that I remember a similar proposal within the last twenty years when districts seeking to increase their levies during a similar freeze had to apply to the Minnesota Department of Education and could receive a waiver if they met certain criteria.  While any freeze could prove detrimental (and clearly erodes any notion of local control), at the very least those districts who can demonstrate a crucial need to seek increased referendum revenue should be afforded that opportunity.

House Education Bill Clears Next Step.  The House omnibus education funding bill passed the House Ways and Means Committee on a voice vote today after a little more than an hour of discussion and the adoption of two amendments.  Representative Tom Anzelc (DFL-Balsam Township) offered an amendment that stripped the ability for school districts to start school before Labor Day and it was adopted on a voice vote.  While not earth-shattering (nor unexpected) development, the adoption of the amendment shows once again the seeming inconsistency when a segment of the economy is pitted against the education interests of the state.  Representative Tim Mahoney (DFL-St. Paul) told an interesting anecdote.  Representative Mahoney is hosting a foreign-exchange student this school year and when the student first arrived, he was worried over how hard it would be for him to catch up with his American high school peers given the date on which he'd arrived in the United States.  In actuality, the student had arrived the first week of September and while students in his home country had been in school for three weeks, he hadn't missed a day of school in Minnesota.  Representative Mahoney's point is that we are competing in a global marketplace and yet we seem to cling to some quaint notions about the status of education in the United States (and Minnesota) and sometimes do not take the reality and nature of that competition seriously.  Folks can't complain about student achievement on the one hand and then tie school districts' hands when it comes to establishing their annual school calendars on the other.  Again, the world won't come to an end if school districts cannot start their formal school years until after Labor Day, but it's just another inconsistency that arises in the education debate.

The other amendment that was attached to the bill concerned the school climate center that is part of the anti-bullying bill.  The anti-bullying bill is also moving on its own (in fact, the Ways and Means Committee recommended the bill for passage and, like the omnibus education funding bill, referred it to the House floor at the same meeting).

The omnibus education funding bill now heads to the House floor, where it will likely be taken up early next week.

The Senate Tax Committee will be hearing the Senate omnibus education funding bill tomorrow morning.

Let's Get Philosophical.  As I was driving to the Capitol today for the House Ways and Means Committee meeting, I listened to MPR's The Daily Circuit, which featured Minnesota Education Commissioner Brenda Cassellius and Anoka-Hennepin teachers' union leader Julie Blaha (also a member of the Governor's Education Finance Working Group).  The discussion centered on testing and how the proposed changes to Minnesota's testing regimen will go a long ways toward delivering more meaningful assessment of student achievement that will be more helpful than the current system for students, parents, and educators.

Here is a link to the discussion:  http://minnesota.publicradio.org/display/web/2013/04/18/daily-circuit-standardized-testing

Interesting Proposal in the House Bill.  I'm sure we will all hear more about this as the education funding bills march toward final passage and make their way into the conference committee, but one of the more ambitious proposals in either bill is found in Article 2, Section 15, of HF 630.  The proposal is entitled Minnesota's World's Best Workforce and it incorporates the Centers of Excellence proposed in the Governor's budget into a framework of goals, incentives, and penalties that would govern a wide range of education achievement activities in Minnesota.  There's a lot of "mays" and a few "musts" in the language of the proposal.

The goals of the proposal are straightforward.  They are:

1. Closing the achievement gap between all racial, ethnic, and economic subgroups,
2. Achievement of a 100% graduation rate,
3. Achievement of 100% of grade-level literacy at the third-grade level, and
4. Having 100% of students college and career ready by graduation.

Healthy set of goals, no doubt, and here is a description of the proposed process to reach those goals.  Under the proposal, all school districts "must formally develop, implement, and periodically review and, where appropriate, revise a comprehensive, long-term strategic education and budget plan for student achievement premised on research-based strategies . . ."  Whew!  That is the primary must in the proposal and a mighty big and comprehensive must it is.

Things lighten up a bit when it comes to the "how" in the language.  The "must" turns into "may" and districts have options on which methods to employ in pursuit of the achievement goals outlined in the proposal, with the caveat that district plans "must include at least formative assessment practices, consistent with Chapter 120B (the academic standards chapter that will likely be revised if the math GRAD is eliminated and replaced with the proposed college and career ready standards), and other instructional best practices that inform cost-effective, research-based interventions, improve student achievement, reduce disparities in students' academic performance, and foster students' career and college readiness without need for postsecondary remediation."  The measurement of the student outcomes is fairly prescriptive and the status of the district's efforts must be reported to the public on at least an annual basis.

It's here where things get a little dicey under the proposal, as failure to reach achievement goals could result in a reduction of revenue (a maximum of 4% reduction per fiscal year) or, in the worst case scenario, result in a school turnaround plan being forced onto the buildings at which students are consistently failing to reach achievement goal.  The responsibility for handing out these punishments (hard to call them anything else) would be the Commissioner of Education along with the Regional Center of Excellence in which the affected school district is located.

This is a pretty sizable mandate (if meeting academic standards can actually be labelled a mandate; it's more like a reasonable expectation) with a lot of planning and reporting to accompany the outlined goals.  No question this is an ambitious proposal that marks, if not a sea change in the learning and assessment world, a considerable departure from the current system.  I don't imagine this proposal will mollify all who decry the elimination of the math GRAD (I just saw a television commercial urging folks to call their legislators and tell them to not repeal it), but it may produce a system that is more applicable to the challenges being faced by students and the entities that serve them.  The proposed penalties are troubling and determining who will be penalized is also a bit on the murky side, but there may be an opportunity here to do some good things and it will be interesting to see how this proposal is received by the Senate and the Governor as the conference committee commences next week.

Recap from Yesterday.  The House and Senate omnibus education funding bills passed their respective hurdles yesterday, although (as reported yesterday morning) the Senate bill took a more serpentine path to approval in the Senate Finance Committee.

After the Senate Finance Committee passed an amendment on a 10-9 vote to delay implementation of the teacher evaluation process by one year, things kind of fell apart and the debate disintegrated considerably.  There were several attempts to re-refer the bill back to the Education Policy Committee, but those efforts were not successful.  Then, there was some concern expressed about the lack of fiscal notes for several provisions in the bill.  Fiscal notes are prepared for individual bills as they move through the legislative process, but when those individual measures are incorporated into the omnibus bills, the fiscal tracking sheet that shows the proposed appropriation level for each program within the bill has traditionally served as the fiscal note.  That explanation wasn't enough for some members, which extended the debate to an extent the committee had to recess so legislators could go to floor session.

After the floor session concluded, the Finance Committee re-convened.  There was an attempt to reconsider the amendment to delay implementation of the teacher evaluation process.  That attempt failed on a tie vote and after that, there was brief debate and the bill passed on a voice vote.  It will now be up in the Tax Committee later this week (Friday likely).

The House Tax Committee approved the House omnibus education funding bill with very little debate.  At these hearings, the debate is usually limited to portions of the bill that is under the jurisdiction of the committee considering the bill.  In other words, the Tax Committee was only looking at the tax policy contained in the bill.  This took all of about five minutes.  It kind of went like this:  (1) Integration Levy re-established?  Check.  (2) Referendum Equalizing Factor increased to ensure bill doesn't create property tax increase?  Check.  (3)  Anything else?  Nope. Then I guess we'll recommend the bill to pass and send it to the Ways and Means Committee.  And that was that.

The House bill's next stop will be the House Ways and Means Committee with the hearing scheduled for Thursday, April 18, at 10 AM.

Education Bills Moving Today.  The omnibus education bills in both the House and Senate are at their appropriate stops this morning.  I am sitting in the Senate Finance Committee watching them consider SF 453.  The House Tax Committee will be hearing HF 630 momentarily and in the absence of immediate legalization of cloning, I'll have to run between committees..  There likely won't be a lot of action at either of these venues as these committees tend to review the bills for their macro-effects and not particular policy initiatives.  While that isn't always the case, I haven't heard any rumblings that consideration of any changes are afoot.  I'll be back later with some other observations.

EDIT 1:  Shows you how much I know.  The Senate Finance Committee is embroiled in a discussion over whether or not to delay implementation of the teacher evaluation process passed in 2011 by one year, from the 2014-2015 school year to the 2015-2016 school year.  I'm trying to calculate the reason for the proposed delay, but most likely it's because as the Senate bill currently stands does not include a line-item appropriation for the teacher evaluation process as in the Governor's bill.  Not wanting to foist an unfunded mandate on school districts (at least this unfunded mandate), it is my guess that the Senate wants to delay the teacher evaluation process until money is available.  Teacher evaluation will obviously cost money (estimates vary but go as high as almost $200 million per year) and districts not participating in the alternative compensation will especially be under duress as they try to implement this process.  Opponents to the delay are stressing that the delay is a policy issue and that the Senate Finance Committee should be involved only in the level of appropriations in the bill.  That has basically been the tradition over the years (especially in the recent past) but at the same time, there are fiscal implications as to whether or not the teacher evaluation process should proceed without a corresponding appropriation for that purpose.

EDIT 2:  The amendment to delay the teacher evaluation process by one year passed on a 10-9 vote.

And now we are back to discussion to the bill as a whole.

House and Senate Education Committees Finish Their Work.  It was a busy Thursday for both the House and Senate education finance-related committees as they finished up their work on their respective versions of the 2013 omnibus education funding bill.  The House actually had to come back this morning after adjourning last evening shortly after 10 PM to finish its work.  The Senate finished around 9 PM Thursday evening after being in committee session for about six hours.

I posted the high points of the House bill in Tuesday's post and I will do the same for the Senate (SF 453) here.  It's a bit difficult to totally "decode" the Senate bill because there are more moving parts due to their acceptance of the recommendations of the Governor's Education Finance Reform Working Group and their counting of the continuation of integration revenue as new money.  The bill also re-establishes the general education levy by combining three levy categories (safe schools, operating capital, and equity) and reducing the resulting sum by $150 million in property tax relief.  This is the $150 million in property tax relief that I thought would find its way into the bill in the form of referendum and debt equalization and I think everyone in every room of the Capitol and State Office Building knows that.  But, 'twas not the case (at least at this point in the discussion).  More on that later.

Here are the major initiatives in the Senate bill:

• Governor's recommendation of $52 increase in basic formula amount for next year with no increase in the second year of the biennium.  Formula amounts are $5,276 for 2013-2014 and $5,687 for 2014-2015.  Second year amount is adjusted upward due to changes in pupil weightings.
• New pupil weights beginning in 2014-2015.  1.0 for kindergarten students in all-day program, 0.55 for kindergarten students in half-day program, 1.0 for students in grades 1-6, and 1.2 for students in grades 7-12.  The 1-6 and 7-12 weights are the same as in recommendation of the Education Finance Working Group.  Marginal cost pupil units are eliminated and new declining enrollment aid established to buffer districts experiencing declines in student counts.
• Funding for all-day kindergarten beginning in the 2014-2015 school year.
• Change in equity formula with factors eliminated and replaced by a sliding scale based on a district's amount of referendum revenue and the distance of that amount to $2,000 per pupil.  Benefit delivered on a sliding scale with maximum benefit of $100 per pupil.
• Creation of basic supplemental revenue category (not new money) of $56 per pupil that is combined in tandem with the new equity formula to mimic the previous equity formula.
• Expanded transition revenue for hold harmless purposes.
• $22/PU of revenue for non-alternative compensation districts for teacher evaluation beginning in the 2015-2016 school year.
• Special education appropriations at current law (including growth factors) for the coming biennium.

If you read through the bill, there are a couple of numbers (and sentence constructions) that pop out.  The numbers are $411/PU and $826/PU.  Here is the reason for those numbers.  In 2001, as part of the Ventura administration's Big Plan, $415/PU was rolled into the general education formula basic amount from the referendum.  The constituted a misleading increase in the general education amount and $415/PU was subtracted from the basic amount when it was used as a multiplier for the compensatory, sparsity, and transportation sparsity programs.  With the change in pupil weightings, another revenue neutral increase in the basic formula is produced, requiring a subtraction of $411/PU to have an apples-to-apples formula value for the multiplier.  In this bill, the subtraction from the basic amount is $826/PU ($415/PU + $411/PU) for the compensatory program and simply $411/PU for the sparsity and transportation sparsity programs.

I would be remiss if I didn't express my disappointment that the committee did not pursue Senator Skoe's SF 177, which called for healthy increases in the referendum and debt service equalization programs, instead of re-establishing the general education levy.  Both these initiatives propose to deliver $150 million in education-related property tax relief and it's not like low property wealth districts won't get a lion's share of the benefit under either proposal.  The problem is that the general education levy approach does nothing to address the disparity in revenue between high property wealth and low property wealth school districts.  It can be argued that low property wealth school districts can use the "space" they get from the property tax relief to attempt to pass additional referendum levy authority, but so will a number of high property wealth districts.  Further, even if a low property wealth district can pass a referendum with the eroding value of the equalization program, the effort in low property wealth districts goes half as far as it does in high property wealth districts.  In other words, the property tax benefit of the general education levy to low property wealth districts will evaporate twice as fast as it will in high property wealth districts.

What often gets lost in the conversation is that equalization is both property tax relief and "tax power" enhancement.  Bringing back the general education levy without doing anything about the equalization factors won't do anything to remedy the property tax wealth disparities that exist between school districts and result in considerable differences in referendum revenue and educational opportunity.

I'm sure this will be discussed again as the session continues.

The education funding bills will likely reach the floors of their respective legislative houses by next week.  Both bills will make their next committee stop next Tuesday (Finance Committee in the Senate, Tax Committee in the House) and I wouldn't be surprised if they made their final committee stops (Taxes in the Senate, Ways and Means in the House) by the end of next week.  I will keep you posted.

House Releases Omnibus Education Funding Bill.  It's only on-line at this point for all of us junkies to gawk at, but the House has made public its omnibus education funding bill for the 2013 legislative session.  The links for the bill and data runs can be found on this page:

Link:  http://www.house.leg.state.mn.us/comm/committee.asp?comm=88006

To access the documents, go to the far right-hand column and scroll down to meeting notice for Wednesday, April 10.  Below, you will find the links to the bill, the appropriation and levy sheets, and the district-by-district data run.

There are  few surprises in the bill and some noted departures from the Governor's bill.  First, the basic formula takes center stage in both years of the biennium, with a proposed increase of $104/PU next year and an increase of $105/PU the year after.  This translates to roughly a 2% increase in the basic formula amount in each of the next two years.  This proposal goes well beyond what the Governor proposed (2% in the first year and an additional 0% in the second) and while the House target is more than $200 million more than the Governor/s, the House bill had to forego or delay a number of the Governor's recommendations.

The bill also raises the kindergarten weighting to 1.0 for kindergarten students in an all-day kindergarten program.  The weighting does not reach the 1.115 weighting for students in grades 1 through 3, but it is considerably larger than the 0.7 weighting proposed by the Governor.

The bill also increases the equalizing factor for the referendum levy, setting it at 122% of statewide average referendum market value.  Under current law, this would be approximately $573,000/PU, an increase of about $76,000 per pupil in the equalizing factor.  This value would change at both the local and state level due to the increase in the pupil weighting for kindergarten students in the House bill.  It will make every district and the state look a little "poorer" in terms of property wealth (the same aggregate property wealth divided by a larger denominator will result in a smaller value).  The proposed value after the pupil weighting change would be around $520,000/PU, but remember, the statewide average will be dropping as well so the aid-to-levy ratio will increase, making it a good move for low property wealth districts.

Districts with referendum revenue per pupil of less than $300/PU will be brought up to that amount through changes proposed for the state's equity program.  A similar provision was part of the recommendations of the Governor's Education Finance Working Group, but was not included in the Governor's budget.

Another way the House was able to fund its ambitious set of proposals was to delay (and somewhat reduce)  the implementation of the Governor's increase in special education.  The House adopts the framework of the Governor's proposed formula (a base formula, people weightings for three sets composed of different disability categories, and an excess cost formula).  This proposed increase will have to be included in the planning estimates for the next biennium if it is adopted in its current form.  The Governor's proposal cost $122 million (actually closer to $150 million by some calculations) and it will be interesting to see the price tag on the revised proposal.

Other highlights (or deviations from the Governor's budget) include:

• Elimination of 11th grade math GRAD test and replacement with requirements developed by last summer's task force.
• No revenue stream for teacher evaluation.  Teacher evaluation costs become an eligible expenditure within the 2% staff development set-aside.
• Re-establishment of the integration levy (now the Achievement and Integration Revenue Program) eliminated by the legislature in 2011.
• No significant changes to the equity revenue program other than the formula component for districts with less than $300/PU in referendum revenue.
• No change in the debt service equalization program equalizing factors.
• School can start before Labor Day but cannot be in session the Thursday and Friday immediately preceding Labor Day.
• Districts can use compensatory revenue for pre-kindergarten programs.
• $56 million in early childhood scholarships.

There are obviously a number of other provisions and I urge you to contact me with any questions you might have after reading the bill or hearing things through the grapevine.

The committee will be going through the bill tomorrow with Thursday (and Friday, if necessary) dedicated to amending the bill.  It is the committee's intention to have the bill out of committee and on its way to the  Tax Committee by the end of the week.  I urge you to check the House web page for live video if you are interested in watching the proceedings live.

It appears the Senate will be releasing its version of the bill on Thursday.

The Eagle Lands Tomorrow.  At least one of the two eagles lands tomorrow, as the House will be releasing its version of the omnibus education funding bill on-line sometime late tomorrow afternoon.  About the only inkling of what the bill will contain is that it has been announced that some improvement to the kindergarten weighting will be included in the bill and that there will be money for early childhood scholarships.

The Senate may also release its version of the bill tomorrow, although it appears there has been a bit of a slowdown as they put their bill together.  One of the rumored points of contention in the Senate is the method that will be used to deliver the $150 million in property tax relief that is part of the Senate's education funding target.  Several different approaches are being discussed, most notably SF 177 (Skoe), which delivers the relief through increases in the equalization factors for the referendum and debt service levies (along with a $300/PU discretionary levy for districts with less than $300/PU in referendum revenue and a corresponding reduction in the referendum cap) and SF 1142 (Stumpf) that would re-establish the general education levy that was eliminated in 2001 as part of the Ventura Administration's "Big Plan" and deliver the property tax relief through that vehicle.

We wait with bated breath and I will pass along the links and documents when they are posted.  Stay tuned.

General Education Levy Heard.  SF 1142 (Stumpf) was heard this morning in the Senate E-12 Funding Division.  This bill is a modified version of the consolidated levy proposal that Senator Stumpf has crafted at several junctures during the past decade.  Under that framework, the operating capital, equity revenue, and transition revenue programs are rolled into a new general education revenue program that will be funded with aid and levy.  What is different about this bill is that after it was amended today, is that it proposes to use the Senate's $150 million target to buy down education levies and uses that to reduce levies for all districts in the state of Minnesota.  In a somewhat related provision in the bill, the alternative compensation program (QComp) is rolled out of the general education program and funded by aid and levy outside that program.

Two points in all of this:  (1) the bill only provides new revenue for a handful of districts.  It does not provide any new money to all districts through an increase in the general education formula, and (2) it does not target the property tax relief toward low property wealth school districts.  While low property wealth districts are treated a bit more advantageously than a district with higher than average property wealth, the referendum levy remains at its current level of equalization, which creates problems for school districts.  I testified in favor of the bill's concepts, but pointed out that the legislation does nothing to narrow the gap between high and low revenue districts and because it does not put significant new revenue into the system, reliance on the referendum levy will not be lessened.  Because there will still be revenue issues, districts will continue to seek additional revenue through voter-approved levies and that system remains both random and inequitable.  So, in short, it would be nice to bring back the general education levy, but if all one does is bring it back without improving the aid/levy situation in low property wealth school districts and/or narrow the revenue gap between high and low revenue districts, the question must be asked, "What are you getting for $150 million?"

This reminds me of the points we made with the Ventura Administration in 2001 when the general education levy was eliminated.  The general education levy was the fairest levy and SEE's point in that discussion was leave the "best" levy alone and improve the levies that were becoming increasingly inequitable.  Doing the exact opposite, as suggested in the latest version of SF 1142, still doesn't address the issue of inequity that exists in the referendum and debt service levies.  Not bad policy, but policy that ignores the biggest problem facing low property wealth school districts.

Money Proposed for Teacher Evaluation.  The Senate E-12 Division also heard SF 1477 (Clausen), a bill that would provide revenue for districts to fund the teacher evaluation process that will be taking the effect in the 2014-2015 school year.  The bill differs from the $20 million the Governor proposed for this effort in a couple of respects.  First, it appears that districts that receive money under the current alternative compensation program (QComp) that would be ineligible to receive money under the Governor's proposal would be eligible under SF 1477.  Further, the money would be distributed on a per teacher as opposed to a per student basis.  There is no specific amount appropriated in the bill, but it's great to see this being in the discussion for this session.  The teacher evaluation is a huge mandate and any revenue injected into the system to help alleviate the burden that this mandate--and worthy as it may be--will inflict on districts throughout the state.

Back to Biz.  The Legislature returned to work this morning after its Easter/Passover break and things picked up where they left off.  The policy committee deadline has passed and its pretty much going to be all about the budget from this point forward at the committee level. A number of measures of interest (gay marriage, gun control, anti-bullying, etc.) made their policy committee deadlines and are now on the floors (or in an appropriations committee) of their respective houses.

For education, the focus now turns to the E-12 Division in the Senate and the Education Finance Committee in the House.  Both of those panels met today.  The House Education Finance Committee spent its time discussing the House version of the omnibus education policy bill that cleared the House Education Policy Committee right before the holiday break.  The biggest topic of conversation today was the proposed elimination of the 11th grade MATH grad test and its replacement with a new set of measurements to determine eligibility for graduation.  The sections of the bill relating to this subject were largely developed by a task force convened by the Minnesota Department of Education last summer.  The report of the task force can be found at this page on the MDE website: http://education.state.mn.us/MDE/Welcome/AdvBCT/AssessAccountWorkGroup/index.html

The House committee adopted a couple of technical amendments, but these provisions will be discussed once again next week when the policy bill will be melded with the portions of the bill relating to education finance.

The Senate spent its meeting time discussing proposed changes to the integration revenue program.  The program looks similar to what was proposed in the Governor's education finance working group, with the focus of the program being refocused toward achievement as opposed to the movement of students.  Further, revenue (all aid as the levy portion of the program has been eliminated with Pay 13 being the last year the levy will be collected unless it is re-established this session) will be based on students of color and not all students in the district.  There are few differences between the House and Senate versions of the bill and what was proposed by the Governor, so this is one area where agreement should be relatively easy to reach.

Equity Redux.  The Senate E-12 Division heard SF 929 (the Senate companion to HF 755), authored by Senator Sean Nienow today.  As a refresher, SF 929/HF 755 is the bill that guarantees all school districts in Minnesota at least 90% of the statewide general education revenue average.  By my count, 32 of SEE's 62 districts would generate additional revenue from the bill and while the effects are not universal, they do zero in on districts with low levels of referendum and/or categorical revenue.  Milaca Superintendent Jerry Hansen testified on the bill as he did at the House hearing, but the day belonged to North Branch parent Julie Belisle, who pointed out the concerns of parents in a low property wealth school district that is unable to generate revenue through the referendum levy and she spelled out those concerns clearly and with passion.

The North Branch story is clear to most everyone who follows education funding in Minnesota.  After passing a referendum levy in the late-1990s (a levy that was subsequently rolled into the general education formula as part of the Ventura administration's Big Plan enacted in 2001, North Branch has tried several times to generate additional revenue through a voter-approved levy, but has failed in those efforts each time. This has forced the district into a number of difficult decisions, particularly the one to go to a four-day school week.  SF 929/HF 755 attempts to remedy this situation at least partly by concentrating its benefits at the lower end of the revenue spectrum.  Whether or not it receives further consideration remains to be seen, but it, along with a number of other bills, have highlighted the plight of districts well below the state average and hopefully this attention will net some results.

Tomorrow will be an interesting hearing in the Senate E-12 Division, with the two equalization bills the Senate is considering--SF 177 (Skoe) and SF 569 (Hoffman)--will be heard.  Both of these bills are very important to low property wealth school districts and I will report on them tomorrow.

House and Senate Budget Targets Set.  The House and Senate majority caucuses have set their budget priorities.  Both the House and the Senate propose higher taxes than in the Governor's scaled back budget proposal.  What differs between the caucuses (and the caucuses and the Governor) is that the House proposes to pay back the school funding shift while the Senate does not and the Senate proposes to do more in terms of property tax relief and higher education spending (at least it appears that way at first blush). The House appears to have more revenue in their budget targets for PK-12 funding and both bodies appear to be committed to weighting kindergarten students at the same level as that of students in early elementary grades.  I hope to have the target documents available electronically tomorrow and I will send them along when I obtain them.

Long Day with Four Meetings.  All of the education-related committees in the House and Senate met today and covered a lot of territory.  With the passage of the first policy committee deadline, the education finance-related committees in both the House and Senate are starting to dig into the bills that have been referred to them by the education policy committees.  The finance-related committees are also using their time to discuss bills with finance/formula implications that have trickled in over the past couple of weeks.  With the relatively late start to the session for a budget year (January 8) and the early first deadline (March 15), not a lot of time was available for members to quickly get their ideas drafted into bill form.  This has led to a backlog over the past couple of weeks as bill authors and committees are playing the legislative version of "Beat the Clock."

While there were a lot of bills of interest presented today, perhaps the most pertinent of these to SEE members is HF 1406 (Radinovich), the House companion bill to SF 576 (Skoe), the creates a $300 per pupil unit roll-in of referendum revenue.  Districts with referenda of less than $300 per pupil unit will be allowed to levy on through a board-approved discretionary levy up to a $300 per pupil unit amount, while districts with referenda above $300 per pupil unit will have their referendum reduced by that amount and replaced with a board-approved discretionary levy of $300 per pupil.  I testified in favor of the bill along with a number of other education groups, included AMSD, MREA, Isaiah, and a pair of students (one from North Branch and one from Cambridge-Isanti).  There seems to be a lot of interest in doing something for low-revenue districts this session and this bill (or something like HF 755/SF 929) would be a big step forward in that regard.

Speaking of HF 755/SF 929, that bill will be up in the Senate E-12 Division tomorrow morning.  I will let you know how things turn out.

Wrap Up From Last Week.  The House and Senate omnibus education policy bills were passed out of committee last Thursday and will be re-referred to their respective education finance committee this coming week, where they will be heard.  The bills had to pass the House and Senate Education Policy Committees by last Friday and did so by being voted on Thursday evening.  The proceedings in both the House and Senate were spirited, but there weren't that many amendments so things moved quickly and the proceedings finished on the same day the discussions began.  That might not seem rare to an outsider, but given the protracted discussions that have taken place over the past few years on most major policy bills, it was a pleasant surprise.  All this said, my guess is there will be more amendments offered to these policy provisions as they become part of the combined omnibus education funding bills (into which the omnibus education policy bills will ultimately be amended).

HF 755 Heard.  Representative Bob Barrett's HF 755 was heard in the House Education Finance Committee last Thursday morning.  HF 755 is a bill that guarantees any district with general education revenue below 90% of the state average revenue up to that amount.  32 of SEE's 62 members receive revenue under the bill and most of these districts either have low levels of categorical revenue, low levels of referendum revenue, or both.  SEE President Todd Anderson, St. Michael-Albertville Superintendent Jim Behle, and Milaca Superintendent Jerry Hansen all testified. in favor of the bill after braving a rough commute to the Capitol because of Thursday morning's snow.  The bill partially addresses the funding issues faced by low-revenue/low-property wealth districts without taking money from districts with high levels of categorical aid or high levels of referendum revenue.  One can quibble about aspects of the bill, but HF 755 is a valid way to address funding shortages faced by many districts and charter schools throughout the state that don't have access to high levels of state aid and have obstacles (or in the case of charter schools a prohibition) attempting to raised revenue through the referendum.

The Senate E-12 Division will be hearing SF 929, the Senate companion to HF 755 authored by Senator Sean Nienow, on Wednesday morning.  I will report on the hearing after it takes place.

Policy Bills Posted.  The House and Senate Education Policy Committees have released their initial omnibus bills.  These bills will serve as the framework to which amendments will be offered over the next two days.  I would assume there will be attempts to both add to and subtract language from the bills.

Here are links to the two bills:

House File 1151:  http://www.house.leg.state.mn.us/comm/docs/0H1151DE3.pdf

Senate File 978:  http://www.senate.mn/committees/2013-2014/1005_Committee_on_Education/scs0978a-3.pdf

I'll let you know if any big changes occur over the next couple of days.

Deadline Week.  This week marks the first committee deadline (Friday, March 15).  All policy bills must clear at least one policy committee in at least one house of the Legislature (any bill that is required to be heard in multiple policy committees must be approved by all related committees in one house).  Companion bills of bills that meet this week's deadline can be heard next week with the second deadline being Friday, March 22.  Of course, nothing is ever officially dead during the legislative session until the curtain comes down at the session's end, but these deadlines govern most everything and one rarely sees major policy legislation enacted if it doesn't meet the deadline framework.

So this will be a very busy week for policy committees in both the House and Senate.  The House released the framework of its omnibus policy bill today.  The Governor's policy bill is serving as the vehicle for the House omnibus education policy bill, but a number of other provisions are contained in the bill beyond the Governor's recommendations.  They will start taking amendments on Wednesday so my guess is Wednesday is going to be a really long night, as a variety of amendments (ranging from cuddly and friendly to downright hostile) will be offered and discussed.

Fast-moving Day.  It's difficult to be three places at once, but I tried and succeeded this morning at the Legislature.  The Senate Tax Committee moved two equalization bills--SF 177 (Skoe) and SF 569 (Hoffman)--to the Senate E-12 Division by motion after recommending the bills to pass.  In addition to recommending SF 177 to pass, the committee amended much of SF 576, the bill that indirectly roll in $300 per pupil unit of referendum levy authority into a board-approved levy of the same amount.  This would help districts with less than $300 per pupil in referendum levy while reducing the voter-approved referendum levy amount by $300 per pupil.  In its original form, SF 576 re-established the general education levy, but the changes made in today's amendment that was attached to SF 177 does not accomplish that.  It is difficult to discern whether or not equalization will play a central role in the Senate's education funding and property tax relief and reform strategies in 2013, but all indications are the subject will be discussed thoroughly and will be given every chance to succeed.  This is the best position property tax equity proponents have been in over the past decade and a half and it is important that we put forward every effort to push the Legislature toward progress this year.

The Senate E-12 Division dealt with three bills and I was called upon to add my perspective on the SF 221, Senator Terry Bonoff's (DFL-Minnetonka) bill on creating a location equity index.  It is difficult to endorse the approach taken by Senator Bonoff in her bill, but the districts she represents have similar problems as a number of SEE districts when it comes to general education revenue.  Senator Bonoff's school districts do not generate much revenue through categorical formulas (compensatory revenue, ELL revenue, sparsity revenue, transportation sparsity revenue).  The difference between those districts and the average SEE district is that they have higher levels of property wealth and are able to translate that advantage into higher than average levels of referendum revenue.  The point I made in my testimony is that increasing use of categorical formulas to deliver revenue to districts has created another set of inequities, some of which can be corrected through the passage of referendum levies, especially in high property wealth districts.  I stressed that we have to get back to a system with a greater commitment to putting the basic formula amount at a level that meets the needs of the average student and has categorical revenue that aims at the "outliers" as opposed to what I perceive is the case now in which the basic formula reflects a minimum level of funding with categorical revenue being distributed from the first instance of "difference."  It's hard to describe with words right here, so I'll let it drop, but we have to bring greater fairness to both the general education formula system and the property tax system and we may have a chance to make progress in both these areas in 2013.
 
Last, but not least, in a busy morning was the House Education Policy Committee's discussion (and approval as amended) of HF 771 (Davnie), a bill that would extend the allowable use of prone restraint in emergency situations.  This bill (and previous bills extending the allowable use of prone restraint) is necessitated by a unilateral decision made at the Minnesota Department of Education (MDE) to ban the procedure by memorandum in the spring of 2011.  MDE convened a working group this past fall to work on an agreement that would hopefully reduce the use of seclusion and restraint through the provision of training to school district staff, more thorough reporting, and a continued ability to use prone restraint in emergency situations.  The report of the working group called for a four-year extension of the ability to use prone restraint, but that was amended to two years in committee today.  Because the bill contains money for training of school district personnel, it will now move to the House Education Finance Committee.

The afternoon slowed down.  The Senate took up the Health Care Exchange bill and was working on amendment number 20 (out of a reported 90) midway through the afternoon, which necessitated the cancellation of the Senate Education Policy Committee.

Legislative Auditor's Report on Special Education Released.  The Office of the Legislative Auditor released its long-awaited report on Minnesota's special education system.  Like all work performed by the office, it is top-notch and comprehensive.  The report gives provides a thorough description of how Minnesota's system of special education works and provides an excellent statistical analysis on a variety of dynamics within the system.

The report was prepared by project manager Jody Hauer along with Sarah Roberts Delacueva and Jodi Munson Rodriguez.  They provided the presentation to a joint meeting of the House Education Finance Committee and the Senate E-12 Division and it was professionally done and elicited a considerable amount of interest from the committee members.  And that interest is what may separate the fate of this report from that of previous special education studies, performed by both the Office of the Legislative Auditor and Legislature.

There's nothing earth-shattering in this report.  Anyone who has worked around special education funding or education funding as a whole over the past couple of decades is well aware of the cross-subsidy from the school district general funds to pay for unreimbursed special education costs resulting from the failure of state and federal funding levels to meet the fiscal needs of school districts.  What is different now than when earlier special education reports were issued is that the environment has changed dramatically.  School districts are under much greater fiscal stress than they have been and the StarTribune article from Sunday has helped frame the issues brought about by unique and costly special education needs and the inadequacy of school funding, both in terms of regular and special education.

The convergence of these dynamics may result in some action across a broad range of special education issues, including funding, in the session ahead (and beyond).  The report clearly calls on the Minnesota Department of Education (MDE) to look at their internal operations and discern if there are aspects of the department's oversight duties that are adding costs to school districts.  MDE Commissioner Brenda Cassellius pledged that the department will evaluate its operations to make certain school districts get assistance in meeting reporting, compliance, and service delivery needs and also pointed out initiatives contained in the Governor's budget that should help those efforts.

Here is a link to the Office of the Legislative Auditor's report on Special Education:

Link:  http://www.auditor.leg.state.mn.us/ped/2013/sped.htm

Snow and a Flurry of Legislative Activity.  A lot of legislative activity, but who knows how much will end up in the ditch on the slippery roads of the legislative process?  Okay, I'll quit with the snow jokes.  If you are all like me, you're wondering how much Florida real estate is going for these days, but why would anyone want to be in a sunny climate when you can have this much fun following legislative activity.

It was a full day of committee meetings, kicking off bright and early with the House Education Finance Committee and the Senate E-12 Division.  Those meetings were largely devoted to local bills, but the discussion surrounding several of these bills was very interesting as it touched on issues like why districts cannot automatically transfer excess debt service revenue and why the current equity formula is structured the way that it is.  A lot of interesting questions.

The House Education Policy dealt with bills relating to school siting decisions (keeping them away from former landfills) and allowing schools to keep a supply of epinephrine pens.  But the lion's share of time in that committee was dedicated to two bills dealing with students in care and treatment programs.  The first bill on this subject is an attempt to make certain that students in care and treatment programs remain eligible for extra-curricular activities to the same extent as Minnesota State High School League rules allow.  It is believed that this bill is redundant as Minnesota State High School League rules are silent on the status of students in care and treatment programs and students cannot be declared ineligible solely on the basis that they are in a care and treatment program.  The Minnesota State High School League plans on sending a letter to all school districts in the state clarifying this policy, hopefully making the passage of this bill unnecessary.

HF 361 (Slocum), a bill that would dramatically change the way school districts interface with care and treatment programs, was next on the docket and discussion went so long that the debate spilled over into an evening meeting.  The big question facing this bill is funding.  There are a lot of changes that would increase costs for school districts, but the bill also calls for increased funding, largely to pay for projected increases in transportation and education costs.  Several groups voiced the need for clarification of many of the provisions.  While there are some concerns with the bill, those concerns shouldn't detract from the work done by Sue Abderholden, Executive Director of the Minnesota branch of the National Alliance on Mental Illness, in pulling this legislation together.  This bill is the work product of an informal working group that has met over the past three years.  There are still some things that need to be ironed out (and the cost may prove prohibitive), but NAMI's commitment to children with mental illness and/or drug and alcohol issues cannot be questioned.

The anti-bullying bill was heard in committees in both the House and Senate today.  The Senate Education Policy Committee heard SF 783 (Dibble), the first committee stop for the bill on the Senate side of the street.  The House Civil Law Committee heard HF 826 (Davnie), the House companion to SF 783.  This was the second stop for HF 826, as it was recommended to pass and re-referred to the Civil Law Committee by the House Education Policy Committee last week.  While the discussion in the Civil Law Committee was supposed to focus only on those provisions relating to data collection, that admonishment largely went unheeded, as the debate was as much about free speech rights and other constitutional issues as anything else.

Big day tomorrow (Wednesday) with the Office of the Legislative Auditor releasing its study on Minnesota's special education system.

Statewide Health Insurance Pool Legislation Hits Committee (Yet again).  I have a cousin whose favorite saying is "If it's not one thing, it's the same darn thing."  He usually utters that line with a bit of gusto and more colorful language (delete "darn," insert "#%*$%#+#"), but his assessment is pretty much on the mark when it comes to the proposal calling for the creation of a statewide insurance pool for school employees.  Like the swallows returning to Capistrano or pitchers and catchers reporting to spring training. every February or March, the mandatory statewide health insurance pool seems to finds its way into the legislative lexicon.  With Republican control of the Legislature the past two years, the bill never really surfaced, but with the change in the legislative majorities, the proposal is back on the radar in the form of SF 446 (Dibble)/HF 573 (John Ward) and was heard today in the Senate Commerce Committee.

As introduced, the bill would require all districts except those that are self-insured and insuring more than 1,000 employees would be forced to participate in the Public Employee Insurance Program (PEIP).  Currently, employee groups can opt into PEIP without the approval of the management side of the bargaining process at the local level.  In its original form, SF 446/HF 573 would flip the process over.  Instead of being allowed to "opt in," districts would be forced to "opt out" with both labor and management needing to agree to either buy insurance in the open market or self-insure.  Further, districts would be able to access the premium reserves that have been built up by the service cooperatives currently selling insurance.  Amendments offered and approved in committee this afternoon changed the landscape considerably, making participation in PEIP voluntary and not mandatory and also allowing the service cooperatives to retain their reserves.

A number of SEE members testified in opposition to the bill, including personnel from Elk River ISD #728, St. Francis ISD #15, Albert Lea ISD #241, and Prior Lake-Savage ISD #719.  Each made it crystal clear that the bill as introduced would limit school district choice and, as a result, drive up insurance premium prices due to lack of competition.  The testimony was powerful and really helped lay the groundwork for the adoption of the two amendments that make the bill much more palatable.

The bill now moves on to the Senate State and Local Government Committee, where it will likely be heard later this week or early next week.  The key thing for SEE membership to do at this point is to contact their legislators and tell them to support the amendments attached to the bill in the Senate Commerce Committee.