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State Education Funds Helpful But Budget Challenges Remain

State Education Funds Helpful But Budget Challenges Remain

If you have been following the state legislature as they work toward a budget agreement, you may have heard reports of the “largest school funding increase in 15 years” or a “massive education funding agreement”. The funding increase is great news for school districts across Minnesota experiencing budget challenges on top of the additional expenses related to COVID-19 and the decrease in student enrollment.

South Washington County Schools (SoWashCo Schools) is pleased to learn about the budget agreement that adds 2.45% to the basic education formula for the 2021-22 school year and a 2% increase to the basic funding formula the following school year. Though this is welcome relief, education funding has not kept pace with inflation for years. From groceries to clothing and to school funding, we are all affected by the rising prices of goods and services. If the state funding formula was tied to inflation, school districts would have a much more stable financial base for daily operations. With the budget agreement, the basic formula would increase our district’s total revenue by 1.2% in 2021-22, bringing in approximately $3.3 million in new revenue. There are also provisions for increases in funds to help pay for special education and English learner education costs.

Like all school districts, the bulk of our budget goes toward paying salaries and benefits. Unfortunately, this past January, SoWashCo Schools was forced to make $9.3 million in adjustments for the 2021-22 school year affecting staff, student programs and services. Though the state funds are helpful, we are not financially stable enough to restore any of the previously approved cuts. We will continue to monitor all costs and problem solve without adding people, programs or other items to the budget.

Many of the reasons for our budget assumptions include:

  • Enrollment decreased during the 2020-21 school year by 500 students creating a $5.5 million shortfall
  • Spending, including unfunded and required programs, will outpace revenue (the money the district brings in through state funding, taxes, etc.) due to inflation
  • Our unassigned fund balance is not within board policy that calls for 5-9% of savings. We currently project a 4.7% unassigned fund balance for the 2021-22 school year. This equates to only 2.5 weeks of operations. The more we can save, the more stable the school district will be for the unexpected

To hold ourselves accountable, we have established an internal committee to review staffing requests before adding new positions, as well as, a committee to ensure we hold to the budget cuts approved by the school board. As district leaders, we need to be accountable for any costs that take us away from presenting a balanced budget. We also need your support in continuing to advocate for proper school funding year-round at both the state and federal levels. After all, the revenue needed to fund education is not determined by the school board or the school district, rather it is by the state legislature.

We will continue to keep you informed on our progress toward a stable operating budget through school board meetings and communications updates. Thank you for supporting SoWashCo Schools.


Dan Pyan
Director of Finance and Operations