The 7 minute video above describes what is in play on this last day and what to expect going forward.
IT IS LIKELY THAT THERE WILL NOT BE A SETTLEMENT:
As of noon today, a settlement still seems out of reach. Howeveer it is not over until it is over!
ONLY ISSUE FOR K-12 TODAY: SHIFT OR UNALLOTTMENT:
It is still possible that the Governor and the legislature would put the K-12 Aid and Tax revenue shifts into law. If so, at least the rules would be clear and there would be a committment to begin reversing the shift when state revenues improve in the future.
If they go the way of un-allotment, the Governor will delay or suspend aid payments to schools. It is unclear if he has any power to affect property tax revenues, but I don't think he does. The amount of money schools receive would probably be about the same, but the cash flow may be less predictable and uneven. The loss of predictability would come from not knowing when the delays would occur. The unevenness will occur because Districts have differing mixes of local tax revenues and state aids.
NO FIX FOR THE TRA PENSION SYSTEM:
Some of the players held out too long to compromise on the TRA part of the Pension Bill. Thus as of now it looks like Article 6 (TRA) will be removed from the final Bill. The fund is moving into dangerous underfunded territory unless there is a near miraculous reversal ( to the positive side) for the stock market.
BE CAREFUL WITH LOCAL COMMENTS.... OTHER UNITS OF GOVERNMENT ARE BEING NEGATIVELY AFFECTED MORE THAN K-12:
Hopitals, Nursing homes, Counties, Cities and Higher Education are all facing significant reductions in their future. While K-12 Education did not fare well either, our outcome at 0% and 0% with shifts is a better scenario.
Thus be careful in your comments so that you don't unintentionally rub salt in others wounds.
The 9 minute long video above provides a summary of where things stand right now at the Capitol and makes a guesses about the final outcome. The legislature is scheduled to adjourn it's regular session next Tuesday.
This is a report to the members of the Minnesota Association of School Administrators (MASA) by Charlie Kyte, Executive Director.
The video and audio podcast above are each 7-8 minutes long. Just click on either to view or hear. IF WE USED A FOOTBALL ANALOGY, WE ARE STILL EARLY IN THE 4TH QUARTER:
We are entering the final 8 days of the regular legislative session. There is much speculation about if the Governor and Legislature will be able to finish on time. I am hopeful that partisan politics will subside a bit and we will see statesmen work to a compromise. In football, we would say we are in the 4th quarter, but we are still in the early part of that quarter with much action still to come.
FATAL FLAW IN GOVERNORS POSITION:
The Governor's original budget gave better consideration to K-12 Education than we saw from the legislative bodies. However he depended on about $1billion coming from issuing a bond that would be paid over many years with the proceeds of the tobacco lawsuit settlement money. This is like taking out a long term home equity loan to pay for current expenses. Fiscal conservatives would see this as a very poor solution. The legislature really doesn't want to raise revenues in this manor and thus there is a $1 billion hole in the Governors solution.
BLENDING THE TAX AND EXPENDITURE BILLS INTO ONE BILL:
Late last week the legislature tried to find another way to produce the $1 billion referenced above. To do so, they blended funding for K-12 Education, Hospitals and Nursing Homes with the Tax Bill. The new revenue would have come from increased taxes on cigarettes and liquor as well as a higher income tax rate on people earning over $250,000 a year. This blended Bill passed, but was promptly vetoed by the Governor
THERE NEEDS TO BE AGREEMENT ON SOME NEW REVENUE, OR THE OUTLOOK FOR SCHOOLS WILL BE VERY BAD:
Without at least $1 billion in new revenue, schools will see the funding set at significantly less than 0% and 0% for the next 2 years. Without the revenue, the state budgets must be cut somewhere. Health and Human Services and K-12 Education each make up 40% of the state budget. Thus K-12 Education will take a big share of the hit without new revenue. You can expect about 3% less in funding each year without a solution.
Let's hope the Governor and the Legislature can come up with some compromise that will allow $1 billion in revenue to be part of closing a budget gap of over $4.5 billion.
THE CASE FOR FUNDING EDUCATION:
Last week, I was led to believe that Health and Human Service (HHS) advocates were going to testify that there should be more cuts in K-12 Education in order to fund HHS. This did not happen (yet), but I prepared a brief testimony as counterpoint. Here is a synopsis of what I was going to say:
** It is a sad day when education leaders and HHS leaders have to argue publicly in an effort to get the money needed to survive.
** My job, however, is to make the case for education.
** Minnesota is in a nation wide and world wide economic contest.
** The winners will be those societies that best educate the next generations.
** Minnesota will not be among the winners if we don't invest in education. And we must invest wisely.
** Look forward 10-15 years...... w/o investment in education society will not have the economic strength to support our needy, sick and frail citizens.
** Invest in K-12 education first and hold us to high and rigorous standards.
** Excellent education programs are very complex. At 0% and 0% changes in education funding, we will destroy many of these programs.
** It is crazy to even be considering 0% and 0%. It will be a disaster if we actually make state level funding cuts!
** Kids only get one chance. We need to get the funding of schools right.
OUTSTANDING EDUCATION POLICY ISSUES:
The K-12 Education Conference Committee is still exchanging proposals on several policy issues. Special Education Rules, Testing, Charter Schools and other issues at still being negotiated. In addition, the Pension Bill and the Statewide Health Insurance Bill are still slowly moving forward. The biggest challenge for the Pension Bill is how to find employer funding of higher contributions in the future. The need to restore fiscal health to TRA and to solve the problem of not having an appropriate retirement option for those hired after 1989 are both acknowledged. The issue of how to pay is the key sticking point. TYPE III LAW:
THe revised Type III law no longer requires special training, physicals and background checks for school employees unless they are specifically hired to drive the Type III vans. Below is the actual language of this correcting legislation:
This is a report to the members of the Minnesota Association of School Administrators (MASA) from Charlie Kyte, executive Director.
There is a video and an audio podcast above. Each is about 8 minutes long. Just click on either to view and listen.
CONFERENCE COMMITTEE WORKING THIS WEEK
The K-12 Conference Committee is supposed to finish their work on Thursday and get it moved onto the floors of the Senate and House. Thus we will have very long sessions on Tuesday and Wednesday.
WAITING FOR THE TAX COMMITTEES, FUNDING IN BALANCE:
The Tax Bill needs to come together so that K-12 Education can get a uniform spending target from Senate and House leadership. Thus even though the K-12 Bill needs to be finished on Thursday, the financial piece can’t come together until the spending target is identified. This means that the funding decision will come together at the last moment. A lot is in the balance: the level of your funding as well as the size of the various shifts.
GOVERNOR WEIGHS IN:
The Governor sent a 6 page letter to the K-12 Education Conferees on Monday. He berated them on the level of funding for K-12 and also demanded that a number of his new initiatives for education be included in the Bill. Some we can agree with, but others are not well thought out. He also identifies language in both the Senate and House Bills that he would support or oppose. We suspect that the legislators will include some of his wishes, but certainly not all of them.
EDUCATION ISSUES IN OTHER BILLS:
K-12 education issues also appear in other Bills. There is language in the Health and Human Services Bill that affects schools and there is also troublesome language in the Data Privacy-Public Data Bill. The biggest other Bill is the Statewide Health Insurance Bill, which will probably end up on the Governors desk for his decision.
THE BIGGER POLICY ISSUES:
We mostly settled homeschooling issues on Monday. Today (Tuesday) we are wrestling with ‘self governed’ schools, Charter Schools, Shared Services and Sp Ed rules. Later we will be working on Early Education.
Of note is that the MN Chamber of Commerce sent in a letter supporting the Senate position on Shared Services. Based on our analysis, the Senate position will make it difficult for many local businesses selling supplies to school districts. Go figure!
These issues are important to settle now because once a final agreement on funding is reached, the whole Bill will be adopted into law.
PREDICTION OF HOW THIS MAY PLAY OUT:
We may see the Governor veto most of the Tax Bill and the big Omnibus Bills. The session then concludes and the negotiations between the legislative leadership and the Governor continue. This all drags on for a month or so. Finally there is a one-day session once agreement is reached. In the mean time, Districts won’t know the funding levels for 2009-10 or 2010-11.
H1N1 FLU:
The new guidance from MDH and MDE states that Districts can make their own decisions about closing schools in case of a flu outbreak as long as the sickness is no more severe than we have seen so far.
I sent a communication to MDE that this decision is leaving the Districts hanging without much political cover. We have asked that MDH and MDE issue a media advisory that they are comfortable with schools remaining open and the sick person isolated at home.
