Number 5, January 29, 2009

The tempo of activity has quickened significantly over the last few days. On Tuesday of last week, the MCLU filed a lawsuit against TIZA and MDE over the issue of charters leasing space from sectarian organizations, among other issues; then last Thursday, we held a press conference to announce the MACS legislative initiative – the Charter School Accountability and Enhancement Act of 2009; on Monday of this week, Rep. John Lesch (St. Paul) and Senator Kathy Saltzman (Woodbury) held a news conference announce their legislation to reform charter schools and alternative schools; then on Tuesday the Governor unveiled his budget proposals for FY 2010 and 2011, and yesterday we finalized the chief authors for our Charter School Accountability and Enhancement Act.

[More about the MCLU lawsuit and potential impact, our legislative proposal and other proposals about charter schools in future entries…].

Today I want to focus on the Governor’s Budget.

On the Surface –

• The Governor’s budget proposes freezing the basic formula of $5,124 per pupil unit for the next two years;
• The Governor proposes that every agency of government, including schools, have to agree to a wage freeze for the next two years;
• it increases total funding 1.1% or1.9% over the next two years depending whether you use forecast or actual expenditures for FY2009; and
• almost all the new funding would be to expand Q-Comp in FY2011 and a new Pay for Performance Plan (Student Performance on State Tests).

Comment:
Even if the Governor’s Budget proposals would be adopted as proposed, which will not happen … that is not how the system works…, the February revenue forecast is likely to show a deficit that is probable to be higher (estimates on the street say it could be close 6 or even 7 billion, not the 4.8 billion on which the proposed budget is based). Any way one looks at it, schools will need to tighten their belts given that the cost of health care, pension costs, utilities and other things are likely going to rise even with a low inflation rate. Schools that are already part of Q-Comp will not benefit from the new funding for that program, as the new funding is to expand it to all school districts and charter schools. The Pay for Performance is quite interesting in that funding would be tied to the percentages of students in each district or charter who show “moderate” or “high” achievement according to the new growth model of student accountability…. more on this in a later entry.

Below the Surface –

• The Governor’s proposal for K-12 is based on an accounting shift – moving from the 90/10 payment system to an 80/20 system beginning in FY 2010. This means that for 2009-2010 schools will receive 10% actual money and will either have to use their reserves or borrow funding for that 10% until October 2010 when the 20% hold back will be paid.

Final Comment:
While on the surface the proposed budget seems to actually increase K-12 funding, it is based on two fundamental concepts that are neither fiscally conservative, nor responsible. The first, shifting the costs to a future biennium, does not solve anything, except, perhaps to shift the problem on to another administration and legislature down the road. The second, by shifting costs forward, means that a significant number of schools districts and charters are going to have to borrow money, in a climate in which both funding for educating kids and lending is tight – more money from the classroom is going to be diverted to interest payments.

Is not putting off things to the future and borrowing money for the present what has gotten us in economic and financial situation in the first place? Just a question to ponder.

Eugene Piccolo

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