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MPS and teachers union hold diverging views of district finances amid contract negotiations

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MPS and teachers union hold diverging views of district finances amid contract negotiations

Feb 27, 2024 | 9:54 pm ET
By Melissa Whitler
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MPS and teachers union hold diverging views of district finances amid contract negotiations
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Photo by Will Jacott/Minnesota Reformer.

Reprinted with permission from Minneapolis Schools Voices

Negotiators for Minneapolis Public Schools and the Minneapolis Federation of Teachers will go behind closed doors on Thursday for their first meeting with a mediator from the state Bureau of Mediation Services. The two sides have been meeting in public since October, three and a half months after the teacher’s contract expired. The two sides have been unable to reach an agreement on bargaining issues.

In fact, they can’t even agree about the basic facts of the district’s financial situation.

The district contends that it has a structural imbalance between the cost of the services it provides and the amount of revenue the district receives. This imbalance has been exacerbated by declining enrollment, state and local funding that hasn’t kept up with inflation, and rising costs for both labor and purchased goods and services. Even before the pandemic, the district has said this imbalance will eventually lead it to deplete its reserve funds, and, in common language, go broke.

Initially, the district expected to exhaust its reserves in 2023, but it says it was able to use federal pandemic funding to make up the gap between expenses and revenue without making significant cuts while also adding to its reserves. With its bulked up reserves, the district now believes that it has until the 2025-26 school year until entering statutory operating debt, the technical term for a Minnesota school district that can’t pay its bills. In statutory operating debt, districts are required to submit a plan to the state showing how they will balance their budget and pay off debt.

To avoid this fate, the district says it needs to significantly reduce the number of schools it operates and reduce staff. In all, it appears the district will need to trim 15-20% of its expenses in the next two years.

A significant part of those cuts will come from reducing the number of district employees because the district spends nearly 80% of its budget on staff. Former Interim Superintendent Rochelle Cox said in October that the district would not close or consolidate any schools before the 2025-26 school year.

The Minneapolis Federation of Teachers says the district’s assessment of its financial position is incorrect. Based on research and analysis done by Lucinda Scharbach, a Chicago-based consultant and former union organizer, the union says the district can shift its spending away from administration and contracted transportation services while raising teacher and paraprofessional salaries 16% and 30%, respectively. The union says higher pay for educators will reduce turnover, bring families back to the district, and grow enrollment and revenue.

The wide chasm between the district and union view of what is possible during negotiations is eerily similar to assertions both sides made during the negotiations in 2022. A deal was reached only after educators spent three weeks on strike in March 2022. The district said it allocated all of its available pandemic aid to paying for the raises, bonuses and additional staffing required in that contract.

The differing viewpoints also resemble the recent month-long strike by teachers in Portland, Oregon, in November. According to the Portland Association of Teacher’s lead negotiator, the union believed that the district could afford the $250 million cost of its proposals. The district repeatedly said it was already facing budget cuts, and could not afford the educators’ demands.

Steven Lancaster, the lead negotiator for the Portland Association of Teachers, wrote a scathing letter after the strike saying that the union and its advisors misunderstood the cost of its own proposals, and misunderstood district finances. In Lancaster’s assessment, the misunderstandings made avoiding a strike nearly impossible. He also said the misunderstanding prolonged the strike.

Scharbach, the consultant currently advising the Minneapolis Federation of Teachers about Minneapolis Public Schools finances, was also advising the Portland Association of Teachers about Portland Public Schools’ finances before and during the November 2023 strike.

In Portland, the district was ultimately proven correct when the Oregon’s chief financial officer reviewed district finances and affirmed the district’s assessment of its expenses and revenue, with one exception. The auditor said the district had not accounted for about $10 million in additional local revenue over the next three years, but still significantly less than the $75 million the union had said was available.

Last week, Portland Public Schools announced it will cut $30 million from its budget for next school year because of a combination of expiring pandemic aid, declining enrollment and higher costs. The cuts will be evenly split between administration and schools, with the superintendent warning class sizes will likely increase. The district will also spend down all of its reserves above the required minimum amount to balance its budget next year.