Student Opportunity Gaps

Forecast Changes the Playing Field

By March 7, 2013 No Comments

By Vernae Hasbargen, MREA Lobbyist

The long awaited forecast of the money Minnesota will have to spend over the next two years produced surprising results and opened the door for legislators “to think big again” as Paul Marquart put it. He is chair of the House K-12 Finance Committee and in a key position to do something with that additional money.

More Shift Repaid

The forecast revealed the state will have $290 million more for repaying districts the money it borrowed two years ago. That increases the amount of its timed payment to 87%. The goal is to get back to 90/10. Historically the ratio is 85/15.

Governor Dayton proposed waiting until 2016-17 to fully repay the shift in order to stretch state funding further this biennium and the Senate agrees. But HF1 fully repays districts this biennium instead.

As Representative Jim Davnie pointed out to the MREA board recently, when it is two against one it is usually clear who is going to win; but many newly elected House Democrats used this issue to win their campaigns and they are up for election before the Governor’s proposal takes effect. The forecast could give them the out they need to side with him.

More Money to Spend?

Taking the shift off the table is important because the Governor’s spending targets for education are so small – only 1% increase in 2014 and 3.5% in 2015. But the forecast could be a game changer because it adds to the money available to spend, or put another way, it decreases the state’s projected deficit.

The Governor faced a $1.1 billion deficit in January when he did his budget. With the recession is loosening its grip on Minnesota, the projected deficit is almost cut in half to roughly $650 billion.

Initially, Governor Dayton proposed almost a billion in new spending with a third going to education from preschool through college. That amount could now be increased.

Or Less?

The unknown here is how the legislature will respond to the Governor’s proposed tax increases.  He reforms the sales tax by lowering the rate but expanding the base to include primarily business services and clothes.

This idea has few advocates. What is more likely is an income tax increase on top earners and a higher cigarette taxes.

Regardless, the forecast changes the playing field because it creates more options for the Governor, Senate, and House to consider and that’s good news for educators.