21st Century Public Education: Enact Funding Flexibility

Most people have no idea how complicated and painful education funding is. Virtually every dollar that comes into a district has strings attached in the form of mandates, restrictions and requirements. Some administrators have estimated that the staff time needed to keep up with all the mandated reporting and submission requirements amounts to nearly half of every full time employee in a school district. If you wonder why the ratio of administrators to teachers is so high, this is one big reason.
For instance, did you know:
1. School districts are required by law to keep separate accounts for capital, food service, debt service, future retirement benefit exposure, and operating funds, and those funds may not be transferred from one fund to another, even if they are not needed in their area;

2. Two percent of the budget every year is mandated to be set aside for staff development (continuing education, etc.), AND the locally elected school board has no control over how those funds are spent – those decisions are made by teachers and school building administrators according to state law;

3. If school boards don’t reach a contract settlement with their teachers’ bargaining unit (Education Minnesota) by January 15th of the contract year, the district is assessed a $25 per pupil penalty;

4. There are myriad “special pots” of money from state and federal sources that can only be used for specific things. Eligibility, submission and compliance requirements are often conflicting and negatively impact other sources of funding;

5. Various districts around the state have special local levying authority that other districts don’t have, and these authorities arise purely out of the clout their local representatives wield in the legislature (it's another form of earmarking). This creates a confusing and unequal playing field.

An economic downturn is the worst possible time for any government entity to ask for more funds. Minnesota’s school districts need funding flexibility. Here is what Minnesota’s public schools need right now:
1. Allow districts to transfer operating money from one fund to another. Locally elected school board members, accountable to the taxpayers, ought to be able to use capital, food service and staff development funds elsewhere depending on the needs of the individual district;

2. Minnesota’s state government should eliminate the 2% set aside for staff development, or at the very least, waive it for the next biennium so school boards can use that money where it is needed most in their districts. Additionally, the law should be amended to give school boards the final authority in how the money is spent to ensure that staff development programs are in alignment with the district’s goals for performance and student achievement;

3. The deadline for settling contracts, and the penalty for not meeting that deadline, needs to be eliminated, pure and simple. This requirement and penalty threat is one of many things that makes it very difficult for school boards to effectively negotiate labor contracts that are in the best interest of the school district;

4. Every “special pot” of money that is currently in existence, whether it’s a grant program, a local levy authority, or something else, needs to be carefully examined for relevance, effectiveness and ease of use, with most of them sunsetted. If the state of Minnesota adopted the same mantra that most moms use during spring cleaning, “for every one thing kept, two things must be tossed”, we would have a cleaner, easier to navigate, more transparent and equitable system of education funding in this state. Reserve special pots for top priority policy items: innovation, outstanding performance, substantial cost savings. Get rid of all the dust bunny programs hiding under the file cabinets because people never bothered to sweep them out.

5. The notion of creating "special" levy authorities for specific budget items like technology, health and safety equipment, etc. is silly.  Local school boards should be able to assess their budgetary needs in total and assess property taxes with the approval of the taxpayers with one number.  Trying to get around that accountability by creating all these special little categories is intellectually dishonest, takes too much staff time, and forces districts to make budget choices that may not best fit their needs.  This line of thinking falls into the dust bunny category above.  Instead, the legislature should craft language that grandfathers any existing special levy now in force into the local districts' current local operating levies (in the odd event one doesn't exist, the special levies would be pooled together to create a standard levy), and let districts work with the aggregate funding without worrying about whether they comply with each special levy's restrictions.

6.  Here's another, bolder thought: in an effort to stabilize education funding while we work out the budget and restructuring at the state level, the Minnesota legislature could authorize an automatic extension for two years of any local levy scheduled to expire within the next biennium.  Why would that be helpful?  First, it would remove the huge budgeting uncertainty that exists in every district where a levy is scheduled to expire during a biennium when the state budget will almost certainly have to cut (or at best, hold steady) education funding. Second, it would maintain stable tax rates for local communities.  Granted, tax rates would not decrease, but they would not be threatened with an increase either.  Third, it would relieve everyone involved from having to go through the process of a levy referendum - expensive and time-consuming for district staff who have to prepare all the data and deal with submission, approval and reporting requirements, divisive for communities during a time when communities are already exhausted from financial pressures.  A two year extension would, in effect, 'calm the system', and provide some breathing space for everyone from MDE to the legislature to school boards to communities while we restructure our public education system in Minnesota.

Simplfiying the budgeting and allocation process will allow school districts the ability to focus on their most important priorities, ease the contortions that legislators, staff members and the public have to go through to understand and administer the process, and might even save a little money to boot as districts spend less time searching for all the little scraps they can find to make up for general fund formula reductions. 

At the intersection of Walmart & Amway: the transformation of human civilization, brought to you by capitalism

I read a galvanizing Wall Street Journal article Wednesday on my morning flight to Chicago. The article focused on a new trend in India: companies that are designing and selling new products geared toward improving the quality of life for India’s poorest populations, and giving individual entrepreneurs the opportunity to build their own businesses along the way.

That bears repeating: Indian companies are now focusing their resources on designing and selling new products geared toward improving the quality of life for India’s poorest populations, and giving individual entrepreneurs the opportunity to build their own businesses along the way.

Those in the know in India have figured out that they don’t have to settle for scraps of hand-me-down technology and jobs outsourced from the West to sustain their economy. Armed with some of the best designers and engineers in the world along with a highly skilled workforce and motivated customer potential, they have decided to build their own internal engine – I’m not even sure they realize exactly what they are unleashing in their country. In addition to the obvious economic explosion coming their way, it will have incredibly profound and far reaching social and political effects.

It started when they channeled Henry Ford with the release of the Nano, Tata Motors tiny little $2,200 car that the bulk of Indians could afford to buy and could physically drive throughout their country’s widely varied road system. Here are some other examples:

- One company has produced a small refrigerator that runs on batteries designed for use in India’s rural areas that sells for $70. Although it is a “major appliance purchase” for small Indian farming families, it significantly improves the safety of their food supply and their quality of life at a purchase price they can afford and a low cost of use they can sustain. It’s kinder to the environment just by its necessary design. Its sale and distribution is handled by women who go from village to village with the small refrigerator on their bicycles.
- Another company has figured out how to open bank “branches” virtually: it has designed a special cell phone with a chip that can compute and transmit basic banking transactions using portable fingerprint identification technology for account holders. A bank representative basically sets up shop in any given small village with the phone and a lockbox of rupees. Customers sign into their accounts using the fingerprint technology, do their transactions electronically, and either deposit or withdraw the physical rupees from the representative’s lockbox. The representative takes the physical currency back to a brick and mortar branch at the end of his/her run.

These are just two examples of ways that Indian companies are transforming the lives of their own citizens. Along the way, they are also blazing a revolutionary path to economic recovery and growth for the entire global market. Want to use less energy? Look to India’s innovative uses of rechargeable batteries and low-power drain electrical devices. Looking to improve product affordability? See how India’s new technologies and production methods are reducing manufacturing and transaction costs. Racking your brain over how to create new business and job opportunities for your underclass? India is leading the way by working with their culture: building distribution channels with independent entrepreneurs and small local businesses that create local jobs, thereby improving standards of living in villages and rural areas all over India. Wishing you could recoup some of the losses you took in the stock market plunge? Has India got some investment opportunities for you, even if your available investment dollars are modest.

Sam Walton opened Walmart with the vision of bringing affordable products to people who needed and wanted them to improve their quality of life. Amway built its global company with the vision to provide a path to business ownership for anyone with the drive to be an entrepreneur regardless of investment capital or previous experience. Those two philosophies are revolutionizing the culture and the economy of India – it’s only a matter of time before they light the way for the rest of us to follow.

http://online.wsj.com/article/SB125598988906795035.html