MPS has $28 million budget gap

Minneapolis Public Schools has a $28-million budget gap for the coming academic year, Superintendent Ed Graff wrote in a letter to the School Board.

Graff wrote that the district will reduce school allocations by 2 1/2 percent. The district will also reduce central services by 10 percent, a move that will include “significant restructuring of our Academic services, as well as reductions to Central Office staff and staff funded centrally who may work in schools.”

He wrote that the district will tap into its reserves, which currently stand at $54 million, to cover the remaining gap. That would bring the reserves to between 5 and 6 percent of the total budget, something the district would work to rebuild over the next four years.

Graff wrote that the goal is to have a structurally balanced budget by the 2019-2020 school year, something he wrote that the district has not had since 2010-2011.

Last year’s audit found a $21-million shortfall midway through the school year, Graff wrote. Auditors have uncovered midyear shortfalls totaling anywhere from $326,000 to $38 million over the past five years.

For the coming year, Graff wrote that he directed his team to take a “dramatically different approach to our budgeting by identifying our budget gap on the front end of the budget cycle, rather than overpromising and scrambling to address a mid-year shortfall when it surfaces.”

He wrote that there “a number of reasons for the gap but that cost drivers include everything from increased special-education compliance costs and salary increases agreed to in last year’s contract negotiations to additional transportation costs and inflationary increases.”

Graff, who started as superintendent in July, wrote that he has directed his team to lead districtwide conversations about the “underlying delivery models for which we currently budget.” He said the district needs to evaluate its facilities’ footprint, transportation costs, the adult-to-student ratio, staffing mix in schools and ultimately, “the programs that are effectively driving achievement and improved academic outcomes for our students.”

“These conversations are urgent and are the only path forward if we are to meet the goals and objectives set in the District’s Strategic Plan ‘Acceleration 2020,'” he wrote.

MPS projects it will have $585.9 million in revenue in 2017-2018, including about $225 million available to schools.

Graff encouraged all School Board members to attend the School Board Finance Committee meeting at 5:30 p.m. today at the Davis Center. The meeting is open to the public.

This is a developing story. Check back for updates.