While districts across Minnesota are receiving new state aid in FY24, that new revenue is being offset by increasing expenses for ongoing school operations. The impact of inflation on goods and services, employment contract increases, new insurance requirements, and continued investments in comprehensive school support and districtwide initiatives are all key drivers of the district's anticipated expenses. This will include a one-time drawdown of the district’s fund balance to help ensure that our students, families and staff continue to receive the necessary support and services needed to fully recover from a pandemic, and put them in the best position possible for a successful 2023-24 school year and beyond.   

Based on what we know about our anticipated revenues and new and ongoing expenses, Saint Paul Public Schools will need to take $34.4 million from the district’s general fund balance (also known as reserves) to cover our expenses in fiscal year 24. The remaining fund balance will be $40.4 million, or 5.31%. This amount remains in compliance with School Board Policy 701.01, which requires the unassigned general fund balance to be at least 5% of annual expenditures. The anticipated 5.31% fund balance will exceed this threshold by roughly $2.2 million.

We believe that SPPS will receive an additional $51.8 million in revenue from the state for the upcoming fiscal year. This much-needed funding will allow the district to keep our existing staffing and programming in place, prioritize lower class sizes, create new educational opportunities, and improve safety and security, all while complying with Board policy on the fund balance threshold. Without this funding, the district would need to draw more money from its reserves in order to invest in the above priorities and maintain our current levels of programming.

ESSER III or American Rescue Plan (ARP) funds are set to expire in fall 2024. These federal funds will have little to no impact on the district’s anticipated change in fund balance. All of the unspent revenue is tied to programs and strategies yet to be implemented. Once these strategies are implemented, the ARP funds become revenue neutral. You can learn more about SPPS’s ARP strategies and budget here.

When SPPS started receiving ESSER funds in spring 2020, most, if not all of these funds were used to implement new strategies and initiatives. In short, these funds were used, and still are being used, to supplement, not supplant, existing district operations. 

District leaders are keeping very close watch on the spending patterns of ESSER funds. Most immediately, the ESSER II funds will expire in fall 2023. As of late May 2023, ESSER II funds that remain will be applied to existing allowable expenses such as classroom teachers. This will prevent losing these time-bound federal funds that would otherwise go unspent.

We anticipate ending the current FY23 budget year with $74.8 million in the unassigned general fund balance, which is 9.83%. If, as described above, the District is able to apply some of the unspent ESSER II funds to existing expenses, revenue will increase without increasing expenses. All things being equal, this would increase the current fund balance of $74.8 million. For example, an additional $5.2 million in revenue would increase the fund balance to $80 million, and give us a larger fund balance for FY24.

In addition, district enrollment patterns, while continuing to decline, are beginning to show some signs of stabilization. In recent years, K-12 enrollment typically declined by 2-3% throughout the course of the school year. However, during the 2022-23 year, K-12 enrollment decreased by closer to 1% percent as of May 2023. If this pattern is maintained through June 14, the district may receive more per pupil funding in FY23 than currently budgeted. These final results will be determined through the annual audit process in fall 2023.

This year, public engagement about budget priorities occurred indirectly through various means. For example, the East African Elementary Magnet School was created via a community-led committee. The district heard from over 9,000 people about safety and security in our schools. Our extensive waitlist for Pre-K told us that we need to open more seats and expand availability. We also know that limiting split-grade (composite) classes and class size are important to families and staff. All of these community priorities are reflected as new investments in the FY24 budget. 

SPPS consistently engages committees that include parents and members of the public. For example our Parent Advisory Councils, language immersion workgroups and the district enrollment committee. It is also common practice for principals and department leaders to engage their leadership teams and/or other advisory groups to help establish budget priorities for the following year once they’ve received their budget allocations in the spring. This may also include engagement with parents via school-based meetings or PTO/PTAs. 

In addition, because of how schools in Minnesota are funded, there is not a lot of room for discretion, especially in years when there are not many changes. With the expiration of ESSER III funds in fall 2024, the FY25 budget process will require more community input as the district works to reassess its priorities in the absence of those funds. Years involving referendums and other voter-approved initiatives also typically involve a more extensive public engagement process.