Finance Discussion Transcript
School Finance Virtual Discussion
Oct. 8, 2020
Dr. Stephanie Burrage, Interim Superintendent
"Good evening we are ready to get started, and we would like to start with a welcome from one of our board - Vice President, Director Helen Bassett."
Helen Bassett, School Board Vice Chair
"Well hello, good evening. I'm so pleased to welcome you tonight and our guest to this discussion on school finance changes. Changes in special education, cross subsidies and the impact of open enrollment. Robbinsdale Area Schools and specifically our Finance Advisory Committee and Special Education Advisory Committees join me tonight along with Dr Burrage in welcoming you and Director Tyrrell. We will just have that welcome in a moment, and we may have before we actually turn to the presentations a few housekeeping tips from our crackerjack communications team. And so before we go further, though, I would like to introduce our Financial Advisory Committee and that's Chair Fishbein."
Gregg Fishbein, Chair of the Financial Advisory Committee.
"Thank you. I'm pleased that everybody can join us tonight for the um school finance event. My name is Gregg Fishbein - I'm chair of the Financial Advisory Council, F-A-C. The FAC is charged by the school board with responsibility for providing financial advice and support to the school board and senior administrators. And we look at a number of issues related to finance. And we are very pleased that we can be one of the hosts of this event tonight and hope that if you have questions you will raise them. If there are issues that you would like to see the FAC address, we are on the Robbinsdale school district website, and we welcome topics for the FAC to consider. And we look forward to this event tonight. With that I want to turn it over to Karen Kugler who is with the Special Education Advisory Council."
Karen Kugler, Co-Chair of the Special Education Advisory Council
“Hi, thank you, Gregg. I'm Karen Kugler, I'm one of the co-chairs of SEAC, the Special Education Advisory Council. We deal with special education issues within the district and try to serve as a place for parents and people to meet and discuss special education issues and to advise on those issues. And I'd like to turn it over for a ‘hi’ from my Co-Chair, Tracy.”
Tracy Ogren, Co-Chair of the Special Education Advisory Council
“Hi, I am Tracy Ogren, I'm new to co-chairing the SEAC committee this year, so I'm excited to be a part of it and I think you might you already got a little pop in from one of my my special little ones, so she'll - I'll try to - she might pop in again. So welcome. Excited to be here tonight!”
Dr. Burrage
“My name is Dr. Stephanie Burrage. I am the Interim Superintendent of Robbinsdale Area Schools. And that is one of our highlights - is when we can see our children that makes me happy and smile, so when she came on the screen I was very happy.
But I have the pleasure tonight of introducing two of our speakers and one is Dr Tom Melcher. He was the school finance director at the Minnesota Department of Education for four decades. He retired in February of 2020, but continues to work part-time to assist with the transition to new division leadership. He also provides support to the Commissioner’s School Finance Working Group. Before joining MDE, he was an assistant business manager with the Collier County Florida Public Schools. Melcher earned a Bachelor of Science Degree in Economics from the University of Wisconsin-Madison and a Ph.D. in Educational Leadership from the University of Florida.
We also have Paul Ferrin, who's currently the Supervisor of the Special Education Funding and Data Work Group at MDE. He has worked at the Department since 2013 in various roles including monitoring special education expenditures and providing data analytics
to the Special Education Funding Work Group. Ferrin earned a Bachelor of Science in Actuarial Science from the University of Minnesota and a Bachelor of Science and Accounting from the
Metropolitan State University.
We are so pleased to have them here tonight and excited to hear all that they are going to share with us. So without further ado, we will get started.”
- Open Enrollment (slides 3-9)
- Special Education Funding (slides 10-16)
- History of State Special Education Funding (slides 18-32)
- Funding Special Education (slides 33-43)
- Q&A
- Closing
Open Enrollment (slides 3-9)
Dr. Tom Melcher, MDE
“Hey, this is this is Tom Melcher and I'm going to take the the start of the presentation and then we'll - Paul and I - will kind of move back and forth a little bit through the information. We have a powerpoint and I'm going to try to share my screen here. Let's see if it's, um, okay now are you seeing my screen? Yes, okay everybody can see that.
So we've organized the presentation today into a section on open enrollment and how that affects the Robbinsdale Schools. And then a section on special education funding, which includes the cross subsidy for special education.
The Minnesota Department of Education is committed to equity for all of our learners and all of the presentations we do highlight the important equity aspects of the presentation we're making. We put a priority on equity, and tonight we're going to be following the money - looking at some of the fiscal impacts related to open enrollment and special education.
[Slide 3]
We've got a series of acronyms here. I'm not going to go through all of them, these are just provided as background for you. Unfortunately a lot of the work we do we end up with some acronyms, so we're just kind of laying that out there. And we'll try to avoid using acronyms but
just as a reference for you we do have these as part of the presentation.
So I'm going to start with a conversation about open enrollment. And open enrollment in Minnesota is under Minnesota Statute 124d.03. You can go to the Minnesota Revisor of Statutes Office if you want to read all of the details about that.
On the open enrollment, or enrollment options, program enables students to attend school in a Minnesota school district other than the one in which they live or a charter school. Open enrollment has been around for a long time in Minnesota. It was enacted in 1988 under the leadership of then Governor Rudy Perpich. Under the open enrollment statute, a school board may, by resolution, limit the enrollment of non-resident pupils in its schools or programs to a number not lesser - not less than the lesser of one percent of the enrollment at each grade level or the number of students from the district at that grade level who have open enrolled to another district. So students have a right to open enroll, but school districts have a right to limit the amount of open enrollment if they choose to.
[Slide 6]
Statewide there are about 80,000 students or about nine percent of all schools who participated in open enrollment in 2018. And here are the data for Robbinsdale from 2014 through 2018. There are currently a little over 13,000 resident children in the Robbinsdale School District who
attend a public school. And the number of children entering the Robbinsdale School District under open enrollment has been growing over the years. It's currently almost 2,000 students from other school districts who choose to enroll in the Robbinsdale District; and then Robbinsdale has about 3,400 residents who choose to enroll in another school district or a charter school. And the breakdown of that is the students leaving to go to a charter school has been growing from about 900 in 2014 up to about 3,400 in 2018 and the number leaving to go to another district has been pretty stable at around 2,000.
So right now Robinsdale has roughly 2,000 students coming in from other districts; they have roughly 2,000 students going out to other districts. And there are about 1,300 Robbinsdale residents that are going to a charter school. So the total number of children served is about 12,000, currently. And that's about 89 percent of the total number of students who live in the district.
Now how does the open enrollment affect the finances of the school district?
[Slide 7]
This table that I have on this slide explains how the open enrollment of one elementary student is going to change the funding for the Robbinsdale School District. So this would be one student coming in there would be an increase in revenue in these amounts. One student going out would be a decrease in revenue in these amounts. For the most part, Minnesota funding follows the student to the district that they attend. So we currently have a basic funding formula that provides for the general operational needs of school districts, and it's set at $6,567.
- So if we had one elementary student come into the district, they would bring in $6,567 with them and that would be all in the form of state aid from the State of Minnesota.
- There's also a small amount of money for a Gifted & Talented revenue. Every student in the district generates $13 for Gifted & Talented - the money gets them focused on those students who have been identified as being gifted and talented.
- Then we have operating capital revenue, which is about $236 per student - mostly aid - and that is to pay for kind of ongoing maintenance of the school district's facilities, and also can be used for textbooks and technology kinds of things.
- Then we have local optional revenue and that's mostly a property tax. That is $724 per student; $52 of that for Robbinsdale comes from state aid and $672 comes as a local levy.
- Equity revenue: $71, all property tax.
- Transition revenue $19, all property tax.
- And then referendum revenue - this is the voter approved referendum is $1,735 per student. And in Robbinsdale, that all comes from the property tax levy.
So bottom line here if you have one student open enroll into the district you've got an increase in revenue of $9,365, of which $6,869 dollars comes from state aid, and the property tax levy goes up by $2,495.
Then we have some additional money, which varies depending on the characteristics of the student. If the student is eligible for free or reduced price lunch - in Robbinsdale, on the average, there is an additional $2,078 per student generated. It's based on the prior year enrollment, so if a student open enrolls, there'll be a one-year lag before this kicks in.
And then if the student is identified as an English Learner, the student will generate an additional $904 per student. So if we had a particular student open enroll into the Robbinsdale District who was both eligible for free and reduced price lunch, and was an English learner that student would generate a total of $12,346 in funding for the district, out of which $9,851 would be state aid and $2,495 would be local property tax levies.
[Slide 8]
The next slide shows the change in average daily membership - that's the average number of students enrolled in the district throughout the course of the year. It's been fairly constant in terms of the district residents roughly 13,500.
Pupil units are a weighted count where we take the students in grades 7 through 12 and they count as 1.2 weighted pupil units. And that's based on the legislature's belief that it costs more for a secondary student than elementary student because of, for example, science labs and athletics and other kinds of activities that are at the high schools. So that also has been fairly stable at about 14,000.
Then we see the adjusted for open enrollment and you can see there's been a little bit of a decrease over the last five years from about 12,600 to a little over 12,000 students enrolled average daily membership. And then when you weigh for that for pupil units, you also see a little bit of a difference there. So we look at the difference - that's the difference between the residents and the adjusted for open enrollment - and what we're seeing is the Robbinsdale School District is losing roughly 1,500 ADM and roughly 1,500 pupil units.
In the last year, the 19-20 school year - when we looked at those changes on the previous slide, somewhere between $9,000 and $12,000 per student depending on the characteristics, that translates into a loss of about $14 million dollars in revenue for the school district because of open enrollment. About $10.3 million of that is state aid and about $3.7 million is local property tax reduction. And this does not include the effect of compensatory and english learners. I didn't have the data to easily identify how many of those open enrolled students are free and reduced lunch, so that's going to be an adjustment on top of this $14 million dollars.
So that's a quick review of open enrollment and how it affects the funding for the Robbinsdale School District.
Are we taking questions as we go or are we waiting until the end?”
Nichol Sutton, Executive Assistant to the School Board and Superintendent
“Mr Melcher, we can wait until the end.”
Dr. Melcher
“Okay, sounds good. If anybody in our audience does have questions, though, as we go, please feel free to put them in the Q-A spot.
Okay, thank you very much, because I'm going to shift now to the special education funding. I'm going to start it out and then I'm going to turn it over to Paul Ferrin, our Special Education Funding Supervisor.
Special Education Funding (slides 10-16)
Dr. Tom Melcher, MDE
[Slide 10]
So this first slide is showing you the three primary sources of funding for special education programs in Minnesota. This is state totals. And these are the dollar amount per ADM, or per student. This is total students in this in the state, not just special education students.
- So this gray area at the bottom here - about $206 per student for all students enrolled in the district - is the federal portion. So the federal funding is only covering a very small portion of the cost of special education.
- Then the green part here, is the state special education aid - it's about 10 times as big as the federal aid - so about $206 per student. And average daily membership [ADM] from federal aid about $2,200 from state aid
- And then the red part up here on top is what we call the cross subsidy - and that portion of the cost of special education that's not covered by either federal special education aid or state special education aid - and the school district needs to use their general resources that they get for all students to cover that difference. And, currently, that average statewide is about $805 per student.
And so the total special education cost per student is roughly $3,200 per -- that's not just for special education that's dividing the cost of special education by the total enrollment of school districts.
So with that, Paul I can continue advancing the slides here while we're switching back and forth and have you talk about federal funding.”
Paul Ferrin, MDE
“All right, that works for me.
[Slide 11]
So for federal funding, we got the All Handicapped Children Act in 1975. It later was reauthorized to what we refer to now as the Individual Disabilities Education Act or I-DE-A. Basically what it is, is the federal government, you know, guaranteeing the free and appropriate public education to all children regardless of disability or, you know, type of student that we have. For the most part, we are awarded several different types of federal grants to help assist with these costs.
In the original, I guess act itself from 1975, they said they would pay up to 40 percent of the national average of the excess cost of special education. In later slides, and obviously even from the previous one, they've really never came close to that. They got close in about the year 2010 and 11 when we got some additional funding. But other than that, most years we have never been anywhere near that.
For the most part we are given three real pots of money.
- Part B, Section 611 is for students age 3 to 21. Since Minnesota is a birth mandate state, so FAPE [Free Appropriate Public Education] is required of all students up until the age of 21. Those funds can be used for students aged birth to 2 as well, but the general provision of the law is usually 3 to 21 for most. For that we're getting $206 million.
- There's a separate grant just for preschool initiative, which provides another $7.7 million to the state.
- And then specifically a grant for birth to 2, providing $8.1 million additional dollars to the state of Minnesota.
[Slide 12]
Next slide. This kind of gives an idea of how this federal money has changed, specifically, the main provision of it. The Part B 611 - the 3 to 21 year-old or in state of Minnesota birth to 21 - funds how they have changed and what percentage of that excess cost they're actually covering. As you can see, in 2010 we did see a massive increase of them getting close to 30 percent, but this was due to the American Recoveries Act. The era funds that came out, which gave us a large one-time payment of funds used over those two years. And once that went away, as part of the stimulus, it immediately kind of fell back. As you can see in more recent years from 2018 to even 21, the amount of federal aid that we're getting from this main appropriation is only increasing a couple of million dollars a year - or a little over one percent. Whereas, the cost of special education is growing closer to five-and-a-half percent a year, and therefore these funds every year are making it look like they're covering less and less of school districts overall costs.
[Slide 13]
Next slide. The federal formula is specific in statute for how you must allocate the funds out. Even though we are getting about $206 million in federal funds, the state is allowed to use about $4 million for the administration portion of it, which is paying for all of, you know, MDE staff, our special education program area compliance and assistance that we’re required, due process, the actual allocation for my staff for doing all of the allocations on both the state and federal side - that's using about $4 million of it. And then there's also some small grants that are given out by the department. We are allowed to set aside about $18-19 million annually for discretionary funds, which those are then specific grants that the department awards out - some go to organizations like Pacer, some are specific to schools. But then the bulk of the money must then be flown or flowed out through this specific formula, which for ‘21 is around $181 million.
Federal law says that the first $55 million, which was the amount that were received back in 1999, must just be based off of special ed child count. And so going back to that time, we took a percentage of all - roughly about 335 school districts - to allocate out what share every one of them had of the special ed population in that year.
So in the case of Minneapolis - around one-and-a-half percent - so one-and-a-half percent of that $55 million goes to Minneapolis. Subsequently going forward, anytime a charter school opens or significantly expands, which by our state's definition is an increase of 10 percent or more, that one-and-a-half percent share that is Minneapolis’ alone must be redistributed among Minneapolis and all charter schools who are serving Minneapolis resident kids. Obviously, charter schools open and close quite frequently that are serving a Minneapolis kid - or even a Robbinsdale, St. Paul, most metro school districts - that we are reallocating that $55 million every single year for about half of the school districts in the state.
The remaining amount of the funds - in this case for ‘21, $126 million - is allocated based off of current year data using 85 percent of it allocated out based on total pre-k through 12 enrollment as of October 1. So just enrollment - who was serving the kid on October 1 includes non-public home-schooled all students in the state to allocate that out. So in total, it's about $106-7 per student for every kid that you have that you're getting additional federal funds besides the base amount. The other 15 percent is based off of, again, October 1, but it's just those students
who are reported as free and reduced lunch, who are therefore below the poverty level. That remounts to about $54 per additional student, which again this is where, you know, getting counts from even the home-schooled and the non-publics do matter because it is funding back to your school.
[Slide 14]
Next slide. Federal special education funds specifically say they are only to be used to pay for the excess cost of providing special ed. On the next slide there is a little supplant and supplement statement, which is the big piece that is federal funds. These funds are used to supplement your spending and your program - not to supplant. What that means for most schools and for the state of Minnesota is we have a Maintenance of Effort requirement or referred to commonly as MOE. For this it says that both the state must provide special education funding state dollars of at least $1 more than what they provided in the prior year. Minnesota provides a lot more than that every single year on top of what they provide in the prior year. But it also means for school districts - they must spend, with their state and local funds, $1 more for serving special education students with those funds than they did the prior year.
The only exceptions for seeing a decrease from one year to the next is:
- A decrease in the enrollment of student with disabilities. So we start looking at an average cost per kid. Obviously if you are serving less kids, your overall cost can gradually go down per, you know, your cost per kid stays the same. But if you have less kids, your total of just what you're spending would therefore be less. That ends up being allowable.
- Having a high cost student - obviously school districts have a lot of kids who go to intermediate special education co-ops or just they have their own where they have a one-to-one nurse, special education transportation - where if that student ages out, moves out of district, you are allowed to justify that as a reason why your costs decrease.
- Elimination of one-time expense, which usually gets into just major equipment purchases.
- Or voluntary departure of staff. For most schools, if they spend less it is voluntary of staff - that is a big thing now as we are seeing our workforce who is retiring out and many of them generally are at the top of their pay scale where the news teachers coming in starting at the bottom are making less. So if a high cost teacher leaves voluntarily or for just cause, and you replace them with a lower cost teacher that difference in salary is a justifiable reason why you did not maintain effort.
There is a 50 percent rule, but for the most part we've, I think only once or twice in the last eight years, even use that because it's really only looking at if a school district's federal special ed funds increased from one year to the next, and it's just 50 percent of the increase. Obviously if we're only getting a million to two dollars more across the state intotal federal funds - most schools are only seeing a few thousand dollars of an increase at most a year and so this doesn't really help for much.
[Slide 15]
Next slide. Getting back to what I said on the previous one, funds are meant to supplement your education program for serving students with a disability, not supplant. So the easiest way to look, is if you paid for a teacher with your local and state special education dollars this year
you should not be next year using and paying for them with your federal dollars because it looks like you are supplanting a cost with your federal funds.
Federal dollars that we do receive come with a 27 month tithing period. So for this school year, fiscal year ‘21 that began on July 1 of this year, that is their first obligation date. Those funds are available to be spent on eligible special ed costs from July 1 this year until September 2022 - so two full years and three months into the third year out. And then they must be drawn out of our system by December 31st in that year. Any funds left undrawn are sent back up to the federal government. In some cases, if we have school closings, if we haven't taken the set aside maximum, we are able to re-obligate some of those funds.
[Slide 16]
Next slide. And last with the special education piece. There is up to 15 percent of your Part B funds can be used for coordinated early intervening services. These are services for kids who are identified to be at risk of getting an IEP. Generally, it's reading intervention, literacy intervention, math intervention - end up being the bulk of it. It's meant for students in all grade levels, but the focus is on K through 3rd grade. And so these are funds that we use to help identify at-risk kids and to hopefully get them on a path that doesn't lead them down to getting an IEP and having a disability identified in the long run.
We do have pieces where if a significant number of race, ethnicity in schools are identifying or over identifying certain races, certain disability types, over a three year span - they are forced to actually by law set aside that 15 percent of those federal funds to run a C-E-I-S program. And in fiscal year ‘21, we currently have 38 schools that have been identified that way, between the school districts and all of the charter schools in the state. And I think that puts back to you, Tom. And you are muted.”
History of State Special Education Funding (slides 18-32)
Dr. Tom Melcher, MDE
“Thank you, appreciate it, Paul. So I'm going to talk about state special education funding and a little bit about the history of state special education funding, generally. And then I'm going to turn it back over to Paul to talk about how the funding for special education works, specifically for the Robbinsdale School District.
[Slide 17]
So, prior to the 2013 legislative session, we had what we call the old formula for special education. And it was in effect through fiscal year 2015. And under the old formula, the state paid 68 percent of eligible special education salaries, plus 52 percent of the difference between contracted service costs and applicable general education revenue, plus 47 percent of special supplies and equipment.
We also had a special education excess cost formula - they paid 75 percent of the difference between the sum of the district’s reimbursable expenditures not funded with initial aid and the tuition payments for services eligible for state aid minus 4.3 percent of the district's general education funding. Now, so in general this was covering roughly 60 some percent of the cost of special education, but it did not include the cost of fringe benefits. So when we looked up here at the 68 percent rate it was only salaries and did not include fringe benefits, which include things like retirement, employer contributions to retirement, social security and health insurance, which are pretty big ticket items for most school districts.
[Slide 18]
The old formula was capped by the legislature. So beginning in 1995, there was a state limit on how much state special education aid there could be. Beginning in 2003, the state had some fiscal problems. And in order to help balance...the state budget, the legislature enacted a change that eliminated any inflation adjustments from special education funding. And so for a period of years, education formula funding a smaller and smaller percentage, because special education teachers were receiving some salary increases due to inflation. But the state total special education aid was not going up, so we ended up prorating.
Then in 2007 the legislature decided to increase the cap, and fund a significant portion of the loss that had occurred between 2003 and 2007. And beginning in 2012, the cap was set to grow at 4.6 percent per year, adjusted by the rate of growth and state total number of students.
So because we had a cap on the formula, we didn't actually pay the full 68 percent of salary and so forth. We paid a prorated amount, and we calculated what was called a “statewide adjustment factor,” which lowered the amount of aid. So if we went back to this formula [as shown on slide 17] like 68 percent of salaries, etc., districts weren't getting the full 68 percent - they were getting that by this proration factor. And the proration factor was 88 percent for the initial aid and 67.6 percent for the the excess cost aid.
[Slide 19]
Now in 2013, the legislature made a significant change in the way we fund special education. Governor Dayton proposed the reform based on the recommendations of a school finance working group that issued a report in November of 2012. The working group recommended that there be a $126 million increase in special education funding for fiscal year 2005. And that that amount of funding growth be increased to $167 million by 2017.
The recommendations of the governor, at that time, were to replace the old formula with a new formula that made the following changes.
- First, the recommendation was to eliminate the statewide cap - so we'd no longer be prorating - and make funding more predictable.
- Also, all special education costs not funded with federal aid would be funded under the formula. And that would include, for the first time, fringe benefits.
- Then, the aid would be calculated using prior year data to improve predictability, so a district would know early in the year, funding levels based on prior year information.
- There was also a recommendation to allocate a portion of the aid based on student data for the first time rather than just looking at the cost to look at how many students with a disability a district was actually serving, and in what primary disability areas That would have made the formula a little more comparable to what we do with general education funding where we fund on a certain rate per student.
- And then, finally, there was a recommendation to require that the serving district - we're going back to the open enrollment discussion here again - that the serving district or charter school, excluding intermediate schools with more than 70 special education students, would be required to cover 10 percent of the unfunded cost of open enrolled students. And before that, the resident district was required to pay tuition for 100 percent of the unfunded cost; and there was a concern that that was creating a disincentive for cost-effectiveness on the part of the serving district if they knew they could run a very expensive program and just bill a resident district for the full cost.
[Slide 20]
So neither the House nor the Senate enacted the governor's recommendation in 2013. But there was a compromise in the final conference committee, and they adopted a scaled-down version of the governor's recommendation that provided about $40 million of new funding. They also accepted the governor's recommendation about tuition billing, and so now the serving district beginning in 2015 required to cover 10 percent of their unfunded cost rather than having the resident district pick up all of the unfunded costs.
[Slide 21]
So, since not all of the governor's recommendations were approved, and since the funding was only about 25 percent of the governor's formula recommendation, there were some changes made.
- So instead of basing the initial special education aid based simply on the number of students with a disability in the district - under this new formula there was a fairly complicated process where we looked at the lesser of the amount generated by the student driven formula or the amount driven by the old law formula that excluded fringe benefits or an amount driven by the total cost including fringe benefits. So we looked at - in each district - we had to calculate the numbers three times, and then we gave them the least of the three formulas.
- Similar with excess cost aid, we looked at the formula - the funding based on the old definition of cost without fringe benefits and the new definition with a lower percentage. And we find them based on the greater of those two.
- And then there was a hold harmless provision - to ensure that no district would get less money under the new formula than the old formula. And there was a growth cap to ensure that no district would have a huge increase - that there would be a gradual increase for all districts.
[Slide 22]
So getting into a little bit more on the mechanics of the new formula. The initial aid is the sum of 100 percent of the special transportation cost plus:
- The lesser of 56 percent of the amount generated by the student driven formula.
- 62 percent of the old formula cost excluding fringe benefits.
- Or 50 percent of the total non-federal cost, including fringe benefits.
And this is all calculated using prior year data.
Then for excess cost aid the amount is the greater of
- 62 percent of the difference between the old formula cost not funded with initial aid, and two-and-a-half percent of the general education revenue.
- Or 56 percent of the difference between the total non-federal cost including fringe benefits - that wasn't reimbursed with the initial aid. And seven percent of the general education revenue.
So in each of these cases we've got a couple of different formulas, or three different formulas, that are being used.
[Slide 23]
When it comes to tuition - so again, this is how we adjust for open enrollment - the resident district is financially responsible, for the most part, for their students even if they're open enrolled to another district or a charter school. They're going to - historically they would get a tuition bill from the serving district. And for the last several years the state has calculated the tuition bill on behalf of the serving district, and has adjusted the payment of special education aid to avoid having checks going back and forth between districts.
So this is how this works - this is based on current year data - for students placed by the resident district in a co-op, or intermediate, or a charter school with at least 70 percent special education students, such as Metro Deaf for example, 100 percent of the unfunded cost is added on to the special education aid or the serving co-op.
So, for example, Robbinsdale students going to Intermediate District 287 that are placed there by the district - the district is responsible for 100 percent of the unfunded cost for those students at the Intermediate. For students open enrolling to another district, or to a charter school with
less than 70 percent special education students, 90 percent of the unfunded special education cost is added to the special education aid for the serving school and subtracted from the aid for the resident district.
So if Robbinsdale resident enrolled in the Hopkins School District, for example, special education services they would in effect be billing the Robbinsdale district for 90 percent of their unfunded cost. These are called tuition adjustments because historically we used to send the
bills back and forth.
In 2017, the tuition adjustments total about $200 million statewide. School districts can elect to use some of their federal special education aid to pay tuition bills, rather than having that come out of their state special education aid as long as they meet a federal Maintenance of Effort requirements.
[Slide 24]
Okay, so moving on to the hold harmless and the growth cap. The hold harmless was included to ensure that no district got less aid. Under the new formula, than, they would have gotten under the old formula in 2016, in later years that's adjusted for inflation and enrollment change. So in 2019 we had 113 LEAs school districts or charter schools receiving hold harmless, totaling about $20 million statewide.
We also have the growth cap, which, again, limits the increase a district can receive over what it would have received under the old formula. And fiscally the first year it was limited to an $80 per pupil increase. In later years, that gets adjusted upward. So for 2019, we had 86 districts that were limited by the growth cap, with a reduction totaling about $17 million.
[Slide 25]
Then the special education funding went along without much change until the 2019 legislative session. And, again, Governor Dayton recommended a sizable increase. The special education cross subsidy was still a major concern - we knew that it was growing every year. And so what Governor Dayton did in the 2019 session was he recommended a $91 million increase in special ed aid for the biennium. That's over two-year budget period to hold the state average cost subsidy per student constant at the 2019 level. And the average for 2019 was $820 per student - so basically the Governor recommended adding enough new money into the special ed formula so that the average cross subsidy wouldn't go wouldn't go up. So we're trying to hold the line and prevent school districts from having to increase the amount of cross subsidy each year.
So the way that that was done was
- To establish a cross subsidy reduction aid - starting in 2020 - as a new component of special ed funding.
- It phased out the special had cap on aid, so it was eliminated in 2021 and later.
- It also reduces the tuition rate paid by the resident school district for open enrolled special ed students served by another district or charter school.
- And it adjusts the hold harmless to reduce the reliance on the 2016 base and factor in current costs.
[Slide 26]
So a little more detail on that - the initial cross subsidy is defined as:
- The difference between the non-federal cost of special education, including transportation. So basically all of the district’s cost for special ed excluding what's already been reimbursed by the federal government.
- And from that we subtract off the state special education aid after tuition adjustments.
- And we subtract off the general education revenue attributable to students receiving special ed services outside of the regular classroom for more than 60 percent of the school day. And for those students we take only the portion attributable to instruction outside of the classroom - the regular classroom.
So what we're saying here - that's the cross subsidy is the unfunded cost of special ed. Basically it's the total cost, minus the state special ed aid, minus the portion of general education aid, which is really going for students … that are in a separate setting. So the general aid brings some of the special ed cost.
So the cross subsidy aid covers 2.6 percent of the cross subsidy for 2020, and 6.43 of the cross subsidy for 2021 and later. And charter schools are not eligible to receive this cross subsidy aid.
[Slide 27]
For initial special education aid, the 19-20 legislative changes update this pupil driven part of the formula. That had been based on 2011 data that was available when the new formula was enacted in 2013, adjusted for inflation. And so the department was required by law to do a study every year of how much districts were actually spending for special education aid. So in the 2019 session, we updated that part of the formula to reflect the newest cost data instead of using an inflation-adjusted 2011 number.
[Slide 28]
Then for special ed tuition billing paid by the resident district for open enrolled students was reduced from 90 percent to 85 percent of the unfunded costs for fiscal ‘20. And to 80 percent for fiscal year 2021 and later. So basically if you’re a district that’s losing students to open enrollment or to charter schools, this benefits you because you’re paying a lower percentage of the unfunded cost at the district or charter school where the students are being served. If you’re gaining students under open enrollment, that are special ed you're getting less in the way of your excess costs covered. So charter schools are going to get some additional special ed aid to fully offset what this impact was - so it'll benefit the resident district, it won't hurt the charter school.
[Slide 29]
Then the special ed cap as I indicated in fiscal ‘20, there was a change that kind of begins to phase out that cap, and uses newer data. And then the fiscal ‘21 the cap is eliminated.
[Slide 30]
Hold harmless - it was adjusted to use newer data, reducing the reliance on the frozen base year and beginning to use a little bit more up-to-date information. And again, that's going to reduce the amount of the hold harmless guarantee. So we're relying more on current data, less on historical information.
[Slide 31]
So then, if we look at all of these changes in special education funding - how have they affected the overall portion of the cost that is funded? So this solid blue line here is showing the percentage of special education cost that's funded by state aid. If we go back to 2013, that was 58.5 percent. We see a steady increase whereby this school year we're at 67.5 and we expect that to continue growing to 68 percent, and 68.8 percent by 2023. At the same time, as Paul mentioned, federal aid has been growing but not as fast as the cost. So it's accounting for a smaller and smaller percentage. So it's dropped from about 9.7 percent to about 6 percent on the average of the special ed cost. So if you add together the federal - currently 7 percent, the state 67 percent, we get to about 74 percent of the cost of special education being funded either with state aid or federal aid. And as you can see that percentage that's being funded with state or federal aid is growing.
[Slide 32]
So then we look at the cross subsidy - and again this is the unfunded cost of special education. How much money the school district has to take out of their general - unrestricted general fund dollars - to cover the hole that's left if the state and the federal government are covering let's say 74 percent of the cost they've got to cover the other 20-some percent of the cost. So on a statewide basis, in inflation adjusted constant dollars, this is a fairly steady number now. In part because of the legislature approving the Governor's recommendation to try to hold that
cross-subsidy constant. So we're sitting right around $800 per student as our average cross subsidy overall. And if we ever got the 40 percent funding from the federal government, you can see that the average cross subsidy now would be around $173. So this part of the cross subsidy - the first $173 is really due to the state not covering the 60 percent of cost, and then this part of the cross subsidy - the bigger part - is due to the federal government not funding the up to 40 percent of the cost.
So with that I'm going to turn it back over to Paul. And Paul, maybe it would be easier for me just to switch the control so you can just advance the slides on your own would that be okay? So I'm going to stop sharing here, and then you can pick that up there's like a little green button at the bottom.”
Funding Special Education (slides 33-43)
Paul Ferrin, MDE
“All right come on. Okay well this thing's gonna be all happy with me about clicking all these different things. All right. Everyone just see a slide? Perfect, all right. Don't mind that I'm like staring off into oblivion it's just this is sitting on a different screen than, well, my laptop is.
[Slide 33]
So for the most part, we now have a comprehensive aid report that gets posted every time we calculate - and there's one for every one of these schools in the state who are running special education programs - at least funding with state dollars. And this four page report - that is somewhat not always the easiest to follow because of just all the variations with initial aid, with all these excess costs - what it really boils down to if you are a school district.
So 85 percent of the 330-so school districts is whatever you are spending on program, at program costs - so your special ed teachers, your paras, your occupational therapist, supplies, equipment used by special education programming, contracted services, anything as long as eligible part of the IEP provided two special education students, you are receiving 61 percent of your prior year cost. Around 100 percent of your prior - you know 100 percent of your prior year transportation, which not only includes special ed door-to-door, getting them to various sites and programs around the district or around various intermediate cooperatives. It also includes the transportation funding for homeless students, students on 504 plans and students just
going to care and treatment programs, as that is also part of our special education formula.
So with that, this is kind of like the borderline of what everyone is roughly receiving. And then now what you end up getting in the long run, because of tuition billing, dictates then there being five main contributors of what, overall is going to change your overall reimbursement rate. What your actual - you know, if your annual cost increases are going up significantly the way the funding formula was working with 2016 and prior and years up till 2020, with a set kind of cap limit for how schools could grow or also what they hold harmless growth. We kind of got more of in a stuck if school districts are roughly seeing a four to six percent increase, they were fine; schools seeing larger amounts would have a little more issues.
And then also looking at just what is your spending per special education student. Not all school districts have the statewide average of around 14.7- 14.8 percent of all students are identified as having an IEP. Some school districts have a higher concentration, some have a lower. Obviously if you have a lower concentration, you have more general education kids, general education dollars, to help offset that,you know, unreimbursed costs, especially after tuition billing. Whereas if you are a higher concentration of special education students, you have less overall general ed students to kind of help alleviate that amount. And this cross-subsidy statement gets a little higher for those schools.
Again, that gets into that overall population - the number of students who are special ed and enroll into your district along with the number of students who are, you know, leaving your district. Whether open enrollment to a charter school, another district or whether they are placed in other cooperatives - intermediates or care and treatment programs. These all kind of have variations; not all programs cost the same. Intermediates, cooperatives generally have much higher cost programs. And those schools then see a much larger piece of the bill.
[Slide 34]
So this next slide kind of is just giving the detail of what's on my following slide. So if, when, you get a copy of this, if wanting to look back as to what the numbers are really meaning; other than that this is just to give a little more insight on the following slide. But I will just talk about the
following slides since I'm here.
[Slide 35]
This shows, specifically for Robbinsdale, their special education program - transportation, everything that is for part of the state special education funding formula. Their cost from fiscal year ‘ 15 through ‘19 actual, and then ‘20 is an estimate - that estimate is based off of using
their last four year average program increase and transportation increase to set a estimated number for both the program and transportation, just so we can run it through a what-if scenario on our side to get an idea of where special education aid is, providing then an overall increase,
you know, what their costs are changing per year.
And then we go into gross special education aid. So this is just their costs expenditures program, transportation, run through the formula, which again is using prior year data for fiscal year ‘16 and later. Fiscal year ‘15 is the last year of the old funding formula, where in fiscal year ‘16 they spent $28.3 million to run their program and transport students. The aid that's generating that $16.69 million is based off of those ‘15 costs. And ‘15 it was the $26 million in spending is what helped generate that $17.7 million. You do see a difference in percentage as it looks like ‘wow their percentage went down from being 67 to basically hovering around 60 percent.’ The reason for that is in ‘15 and older years, cooperatives and intermediates were
unable to directly receive aid based on their program costs. And, so therefore, we had to take their program costs and allocate the aid back to their member districts, or based on tuition billing the students that they served. And so that $17,773,000 is being inflated by the aid that was received for program students’ attending - for the most part Intermediate 287. 287's program, generating that share of aids to go on top of theirs.
That's also then why, afterwards, in the tuition adjustment, we see the tuition billing amount, you know, $2 million higher than where it currently has been for the last few years - is because then the intermediates had to fully tuition bill all of their unreimbursed costs. Where once we moved to the new formula in 2016, the intermediates are now receiving aid like everyone else on their programs, and they’re only tuition billing their unreimbursed costs. So if everyone's getting roughly 60 percent of their costs covered, the intermediates then are tuition billings less.
There is the caveat with regard to how general education revenue moves. If a student is placed into a program, all kids in co-ops, intermediates, those high-cost programs are placed in by law - the general education revenue stays with the resident district. And tuition billing - the system that's calculating this $7 million, $5.1 million - is calculating that gen ed revenue and billing it as well. So those intermediates and co-ops place students aren't having to get a bill from the state for unreimbursed specialized costs and then those aren't having to also bill it separately just for the general education revenue.
We can see where their net, you know, special education formula is. Which in 2016, you know, would have been an increase - ‘17, ‘18, all of these years - however we had this provision for a hold harmless and a growth limit that became, you know, applicable in 2016. That sets, you know, minimum amounts and maximum amounts that a school district can receive.
In the case of, Robbinsdale, for most years they've been over that growth limit amount. And basically, that's kind of what is capping their aid. Once we now move to Fiscal Year ‘21, which is not on the screen as the data is far to in its infancy to even bother publishing for this type of, you know, presentation, there is no cap. And so, therefore even in Fiscal Year ‘21, they do get to see a much larger increase to their overall aid. After that formula, new formula state aid is compared to that hold harmless minimum, growth limit max - can't get less than the minimum, can't get more than the max - that's what results in their net aid.
And then, as Tom said in the earlier slide, beginning in Fiscal Year ‘20, we added for the subsidy aid provision, which for them is, getting them an additional $400 almost $60,000. The final amount shows what their final net aid is - so what they're actually getting in the long run paid to them from the state of Minnesota. And then what that reimbursement percentage is. We can see this held fairly steady around, and again is estimated, but there has been a change even in Fiscal Year ‘20 for how that growth limit is calculated, as Tom alluded to earlier with there being two separate calculations for schools who have seen larger increases in costs, and/or their tuition adjustment is kind of held a little more steady. This does benefit them greatly for being able to reimburse a larger percentage of their costs, along with the cross subsidy aid, adding more to their - what was their unfunded prior year cost.
[Slide 36]
So now these next slides, basically I took and in providing a comparison of Robbinsdale along with every one of the public school districts that border, you know, physically, geographically are touching part of Robbinsdale. So this first slide is just showing what the average special education spending per special ed student. So this is total special ed cost divided by total, just special education ADM. So not general ed or all students, just their share of just the special ed students that they're serving.
Robinson has one of the higher amounts, but not really compared to the Minneapolis, Wayzata - more in line with the Osseo right next to, and Columbia Heights. This just gives kind of an idea of where spending is. Programmatically, each of these schools have, you know, various numbers of sites with various staffing ratios. Obviously teacher contracts for unions, cost of what each one is providing for benefits and other services, you know, a multitude of things can have a drastic impact on what average spending is for students themselves at each one of these districts.
[Slide 37]
Next up is we're showing a four year average from Fiscal Year ‘16 to ‘19 of the cross subsidy. Again, remember this is their unfunded special education amount divided by their total ADM to set what is the first - in this case Fiscal Year ‘19 - $1,280 of general education revenue generated by every student, is going to cover their unfunded special education costs. And then it shows their increase or change over the time period itself.
[Slide 38]
Next up we have their special education population total students served, along with their, you know, total students in general serve. First, both of these would be not just residents of Robbinsdale or Osseo - they'd just be the total number of students served, both with an IEP and in total with and without, which gives you an idea then where they stand with their overall population of special education students. Wayzata on the lower end at a little over nine percent. Whereas most of the others are in that 14 to 16 percent range, which is fairly close to the statewide average of just under 15 percent.
[Slide 39]
Next we have special education resident ADMs compared to their total student serve. So this really is looking, again, at just the share of these special ed students that Robbinsdale, Osseo, Brooklyn Park they're serving, and what are their own students. And so basically how much is coming from open enrollment. So in the case of Robbinsdale, 81 percent of their special ed population are there - they're serving their own residents of Robbinsdale. Brooklyn Center, being a much smaller district, is actually serving 42 percent of their students - are, you know, native residents of Brooklyn Center - where they are seeing a much larger piece of open enrollment.
[Slide 40]
Next up we get special education - their own, you know, students served as a comparison of, you know, their kids who are actually going outside of the district. So in the total resident special ed that 1,972 is those are all of the resident special ed students who live in Robbinsdale School District: 1,382 are being served by the District; 589 of those students are either open enrolling to a charter school, another school district or are, you know, placed in a cooperative care and treatment type program. And so it kind of just gives an idea of how many of those kids are now
exiting their program, whether through open enrollment or placed to receive additional services.
[Slide 41]
And now we kind of get into the last kind of couple of slides, which are dealing with the number of students, specifically by entity type of these kids who are going out. So Robinsdale has, you know, 303 of their kids are leaving, going out to school district - and on average that unreimbursed amount for school district kids - is they're being billed $5,500. Students who are going to a cooperative, which generally also is joint powers agreement or an intermediate - in this case specifically 287 - that unreimbursed cost is closer to $47,000. And for the students going to charter schools, it is around $9,800.
As we can see the unreimbursed cost, you know, services provided by school districts, are significantly less than students served in cooperatives. However, generally students who are served in cooperatives, intermediates are higher cost kids - they're requiring almost ‘round-the-clock special education services, not - you know, most students who are served in districts, for the bulk of them 70 to 80 percent are federal setting one or two. Which means they're spending roughly anywhere from 20 to 40 percent or less of their time receiving special education services. So usually they're just getting pulled out, going to a resource room; whereas most students who are going to a cooperative, intermediate - they are full-time special education programs, small class sizes five-six kids, seven to a teacher, usually pairs that are involved or multiple pairs are involved for some students. So these do get to be much higher cost programs.
Charter schools generally are a lot smaller than school districts. And when you have, you know, K through 5, K through 8 grade students having a, you know, special ed class, the number of teachers you're needing - and just spreading of that cost - you know, their capacity to serve could be greater, but they are just limited. In most charter schools, on average in the state, have less than 200 total students, less than 25 to 35 of them are special ed, and so it's just volume that they have that kind of equates to a lot of that. And also they rely more heavily on paraprofessionals to serve students. And so that's what kind of shows that average increase cost, or average unreimbursed share of it, being higher in charters than districts.
[Slide 42]
Next we kind of are comparing these staffing themselves to show how many of them are licensed - so your teachers, contracted staff, contractors it doesn't matter, teachers’ coordinators, speech pathologists, social workers, school psychs - everything that is a licensed required either through PELSB, formerly the Department of Teaching, or board of teachers or licensed through DHS or some other sort of qualifying license. Compared to then the non-licensed - which, for the most part, are your special education directors, I mean are your paraprofessionals. And the admin are specifically your directors, assistant directors and office staff that are specifically working in a special education department area. Robbinsdale has a higher - or a lower piece of license and relies a little more heavily on the non-license. Again, programmatically, every school ends up being a little different from others doing this, some want to staff in higher ratios or provide more paras than others, that it entirely becomes a school district determination for how they best want to meet the needs of providing for their students.
[Slide 43]
And last up we have teachers, teacher-to-student ratios across the board. As we can see, almost all the schools are right around 12 students per special education teacher. And with regard then to the paraprofessionals, Robbinsdale is one of the lower, so providing more
paras on average per student than their neighboring bordering districts.
And that is all we have on special education funding and everything else.”
Q&A
Dr. Tom Melcher, MDE
“Well this is Tom. There were some questions in the Q&A and I typed up some answers. I'm not
sure if they’re as complete and there may need to be more discussion on those. There was one dealing with special education funding that Paul might want to look at on the on the chat.”
Karen Kugler, Co-Chair of the Special Education Advisory Council
“So actually, if you don't mind, we can move into our question and answer period. And so, if you don't mind, I'll moderate that and kind of ask the questions and if you've already got kind of some of your answers ready that'll be great.
All right, so one of the questions that we had was - clarify again what LEA means. On slide 13, did you say $106 per student?”
Paul Ferrin, MDE
“So I can answer that. So LEA is a local education agency. It's a federal definition that encompasses school districts, charter schools, cooperatives - any type of public education entity. Various states use different terms for these, you know, school districts cooperatives. But they all - any public entity providing education - generally is referred to as a local education agency.
The $106 per student is - of the flow through portion of the federal funds - which about $126 million in Fiscal Year ‘21, $106 per student for every kid enrolled on October 1 in any one of those LEAs, whether a district or a charter school, is what it basically amounts to. Or if you are a resident of Robbinsdale, and you are attending a non-public private school or home school even in the district, as long as we're getting the counts for everyone - it roughly amounts to for every enrolled student on October 1 - it's generating dollars to Robbinsdale in the federal special education funding formula.”
Karen Kugler, Co-Chair of the Special Education Advisory Council
“Our next question is we've been hearing the acronym SOD from some of our community members. What is SOD? What happens when school districts are at risk for SOD? Is this true for Robbinsdale Area Schools?”
Dr. Tom Melcher, MDE
“Okay, I can take that one. SOD means Statutory Operating Debt. The state of Minnesota defines statutory operating debt as a district that has a negative general unreserved fund balance of greater than 2 ½ percent of expenditures. So the district is in the red by 2 ½ percent of expenditures. If the district has a, is in SOD - and we determine that once a year based on the audited financial statements - then the Department of Education's school finance team will meet with district officials and work on a plan for how the district will get out of statutory operating debt. Usually if a district's in statutory operating debt it may take two or three years, depends on how far they're into debt. And so the district will submit a plan; the department will review it and approve or disapprove the plan; and continue to work with the district on getting out of statutory operating debt.
I just looked up the numbers for Robbinsdale for the last two years. Robbinsdale is not in statutory operating debt. They do have a relatively low fund balance compared to the state average. The fund balance as of June 30th, 2019, was 1.11 percent. So they - basically that means they have enough reserves at the end of the school year to cover one percent of their budget. The average is between 15 and 20 percent, so it's quite a relatively low balance - but they're still in the black. And the preliminary unaudited data for Fiscal Year 2020 shows that they have a positive balance of 1.62 percent. So they, the audit reports, are not due until December so we'll have better information later. But based on the preliminary information, it looks like the district is very stable and has a small positive balance and is not in SOD.”
Karen Kugler, Co-Chair of the Special Education Advisory Council
“Great all right. The next question that we have is going back to the open enrollment revenue loss slide. From the slide, how much - oh the questioner says, “I understand from that side how much we lose on average per student; on average how much are we seeing coming into the school district for those students open enrolling into the Robbinsdale Area School District?’”
Dr. Tom Melcher, MDE
“Okay, and the answer to that one is that those numbers apply the same whether the student is coming into the district or going out of the district. So if the district loses one elementary student who's not on free and reduced lunch, not EL, they will generally, they will lose $9,365. If they gain one student, they gain the same $9,365 dollars. So it's the same amount for a student. We actually look at the number going out, we take the net difference, we multiply it by that by those amounts. Now the amounts do vary depending on the, whether the student is eligible for
free or reduced price lunch and whether the student is an English Learner. And I didn't have data to identify for the students who are coming in versus the students who are going out, how many of them were free and reduced lunch versus how many were EL.
But if a student coming into the district is a student eligible for free or reduced lunch, there's a one year lag because we based the compensatory funding on the prior year for our October 1st count. But on average a student eligible for free or reduced price lunch would generate an additional $2,078. So you lose one student, you lose the $2,078, you gain one student you gain $2,078. It does vary a little depending on the building that the student is enrolling in - the higher the concentration of poverty in that building, the higher that number. And with English Learners, the number is $904. So if you have an English Learner enroll into the district, that's another $904 to help with the English Learner program in the district, if you lose an English Learner to another district you lose $904. So it works the same going in or out.”
Karen Kugler, Co-Chair of the Special Education Advisory Council
“All right, next question. So would we take the total spent cost per pupil in Robbinsdale Area Schools times 41 percent in order to calculate our next per SpEd student?”
Paul Ferrin, MDE
“So I can answer that. So on slide 36, where I have the average Fiscal Year ‘ 19 cost per special ed ADM roughly at $19,800. So if you took that times 41 percent, that would be how much of that $19,817 they received in state special education aid. And therefore, the difference would be
their unreimbursed. And then if you multiply by all of their special ed students served, up to what that cross subsidy total amount is.”
Karen Kugler, Co-Chair of the Special Education Advisory Council
“Next question. Out of our 1,500 net loss of students due to open enrollment, do we know about how many of those students are special education students?”
Dr. Tom Melcher, MDE
“I don't have that date at the tip of my tongue. I don't know, Paul, if that's something we have, that we could get for them?”
Paul Ferrin, MDE
“Because it's, so if it's 1,500, so they're lose, it was - for total out special ed, yeah residents. So special ed served elsewhere was 589 in Fiscal Year ‘19.”
Dr. Tom Melcher, MDE
“And that's just the students who have open enrolled that went to a charter school, not the one served by an intermediate?”
Paul Ferrin, MDE
“Yeah, so it'd be all kids out, so it'd be any resident special ed student of Robbinsdale that either opened enrolled into a neighboring district, a charter or was placed into, well for the most part, to the intermediate they belong to.”
Dr. Tom Melcher, MDE
“So, but, just to clarify for purposes of the open enrollment, those statistics - a student who the district places in 287 is not considered to be part of the open enrollment - they're still technically being served by Robbinsdale; so Robbinsdale collects the state aid but then they have to pay the excess cost for special ed to 287 so I'm not sure if you have a way of extracting that from?”
Paul Ferrin, MDE
“Yep, so on the next slide then of mine where it split out each one - on side 41 - the number of students who are special ed in open enrolling into another district was 303, or into a charter school was 202.”
Dr. Tom Melcher, MDE
“Okay, so those are the numbers then that would be consistent with the 1,500. Okay.”
Karen Kugler, Co-Chair of the Special Education Advisory Council
“Perfect, all right. The next question is - what is the current Robbinsdale Area Schools cross subsidy amount for this year?”
Paul Ferrin, MDE
“So the most recent year we have is Fiscal Year ‘19 and it is $1,280. Fiscal Year ‘20 is - we're still in the finalization. School districts have until November 30th to send us final audited UFARS data, final MARSS data for student reporting and final special education expenditures. They get
about 15 days then in December to do any appeals. And then there's a whole reconciliation process, and everything else to then calculate final amount, which usually then doesn't get finalized until around March, so yeah still a while.”
Karen Kugler, Co-Chair of the Special Education Advisory Council
“All right, next question. What are our cross subsidies compared to other districts?”
Paul Ferrin, MDE
“Oh let's see, let me grab a separate report for this. We do post a report to the website every year, ‘19 being the most recent. It's on our reports - the legislature page … 50-page report, and it does end up providing both a district comparison, and charter school comparison to show, you know, there's statewide. And then also it just goes by every individual school, both in just number order, you guys - Robbinsdale being 281 - down a little ways; and also does it in order, by, you know, just, highest cross subsidy to lowest. Again, Robbinsdale’s was $1,280. We do have a bistratum, which usually is referred to as Minneapolis/St. Paul, and then first tiered suburbs, second tier, and working its way out throughout. So the other metro inner - the average of all of them - was $900 and about 82 dollars. So Robbinsdale is on the higher end at $1,280.”
Karen Kugler, Co-Chair of the Special Education Advisory Council
“Thank you. All right next question. What impact might COVID have on funds received from the state? So, for example, if students are moving around more because of COVID, do we know what that might look like? Do we have any data?”
Paul Ferrin, MDE
“So for Fiscal Year ‘20, we don't yet have final MARSS data to say what the last few months of the year caused. For the most part, most schools just ended up reporting - kids who are there as of, you know, March 13th, for the most part. If, you know, we're being served and students - we're really given the option or ability to move around that. Well, for this year we do not have any Fiscal Year ‘21 MARSS reporting - that doesn't really - we get a final fall - which is what drives all that federal funding, along with compensatory in long run. But that's not done until
early January of next year. So.”
Dr. Tom Melcher, MDE
“And I believe there were some things passed by the legislature this last year that tried to stabilize that funding, at least for the ‘19-’20 school year.”
Karen Kugler, Co-Chair of the Special Education Advisory Council
“And then the next one is - these special education students would be students with an IEP. And could it also possibly be gifted students with unmet needs, correct?”
Paul Ferrin, MDE
“Yes.”
Karen Kugler, Co-Chair of the Special Education Advisory Council
“And then I have another question, and I think this one actually might go more towards Greg. What is the school finance working group? What is their charge? And then there's a note John Vento, School Board Director, currently sits on the working group.”
Dr. Tom Melcher, MDE
“Well i can speak to that. There is a school finance working group that Commissioner Ricker established about a year ago. John Vento's one of the members. And they're looking comprehensively at Minnesota school finance and what some of the problems are and how it might be reformed. They are - they had a large number of meetings over the last year, and they're getting very close to making recommendations. They've had subgroups meeting; the subgroups have reported, and there's kind of a draft report that is being voted on, actually, currently by the members of the group. So they have recommendations for increasing general education funding, they have a recommendation to reduce the special education cross-subsidy and a number of other recommendations across the board when it comes to school finance. So you should be hearing something - I think they're due to come up with their final recommendations by October 29th.”
Karen Kugler, Co-Chair of the Special Education Advisory Council
“Then we have one last question, at least as of now. Minnesota does not use IEPs for gifted students, so they are not reflected in this presentation or in special ed funding. So I'm curious how gifted funding factors in here.”
Dr. Tom Melcher, MDE
“Let me speak to it, Paul, but you may want to add something to it. But as part of our general education program, we have a categorical - it's called Gifted and Talented revenue - it provides $13 per student for every student set aside for gifted programs. The district then identifies how they want to spend that for programs for students that have been identified as gifted within the district. But I don't believe it's part of the definition of special education for purposes of the special ed, correct?”
Paul Ferrin, MDE
“Correct. Yeah, as Robin Woodley, who is our Department Special Education Director. Minnesota does not specifically identify. We have 14 specific special education identifications: speech, emotionally, behavioral disorder, traumatic brain injury, similar to those. We do not have one specific for gifted-talented and on an IEP. So those students would be intermingled with whichever their primary disability is. Any special education that eligible service obviously goes through the funding formula. Many of those usually have a social skills written into their IEP, and
so that's kind of what helps cover a lot of their costs.”
Karen Kugler, Co-Chair of the Special Education Advisory Council
“Looks like we have one more question, but it's still getting typed out. All right so from 2015 to 2019, based on the presentation, Robbinsdale’s special education cross subsidies increased nearly 20 percent because of the cap - is that correct? Is that a correct understanding?”
Paul Ferrin, MDE
“It wouldn't be. Again as, as mine was kind of - I really want to stress on, like, there's way more than one thing that dictates how the funding formula goes. They would have always had a fairly higher cross subsidy than what the average was for the inner metro school districts were. Obviously it's, you know, $980 right now in ‘19. In 2016, Robbinsdale’s was around $1,078, so it was even higher. And back then, I believe the average for the middle would have been somewhere in the $830 range. So, they've always kind of been up above. It's just that you know they've kind of seen that similar constant growth over that time for just how programming's gone. But the same is where it can be dictated by a number of students being placed out, how staffing ratios go how your school, there is a lot of components to it - that I can't just say it's solely because of the cap.
Obviously, in Tom's early part of the presentations on changes to the funding formula that came out of the working group, that then got enacted as part of the 2013 legislative session - originally they wanted to put, you know, $120-40 million into it. It was ended up being less, but it was still more than what we would have gotten otherwise. So, if the school was over the cap, they still were getting more funding than what they would have before.
The big thing then, is did every year you get closer to that cap number as it was inflating or were you shooting further away from it? If they're clearing it, you know, by leaps and miles every year then getting more - and their funding isn't - and that cross subsidy is getting made worse. If not, it's kind of, it's just this is kind of in the line of where it is.”
Dr. Tom Melcher, MDE
“And just to reiterate that the cap has been eliminated for 20-21, the current school year going forward.”
Karen Kugler, Co-Chair of the Special Education Advisory Council
“All right. Well, I'm going to turn it over to Director Tyrrell.
Closing
Sherry Tyrrell, School Board Director
“Thank you. Well as we close, I'd like to thank the Financial Advisory Committee and the Special Ed Advisory Committee for co-hosting this event with the district. II have been living and breathing budget numbers for 13 years, and I always get something new out of these sessions, so thank you very much.
Special thank you to Tom Melcher, our school finance specialist, and Paul Ferrin, our special ed funding and data supervisor. Well, I can't say you made it easy. You certainly demonstrated the complexity involved in special ed finance, and how we have to get it right because our kids depend on what those numbers mean to get the services that they need.
And I want to remind people that this webinar has been recorded. It would be posted to our Youtube station, channel. And should be loaded into our question answer section on our website, shortly. Please share this out with others who are struggling to understand school finance, because they'll understand why they are struggling to understand school finance.
So thank you so much for your time this evening, it was very valuable to all of us. Have a great evening.”
Dr. Tom Melcher, MDE
“Thank you, our pleasure.”