Superintendents: summer unemployment, paid leave and other mandates are deepening district budget gaps

Superintendents and district business officials told the Minnesota Senate Education Policy Committee on Jan. 23 that a patchwork of recent laws and program changes is widening budget shortfalls and leaving districts to cover costs they cannot sustain.

"Anoka Hennepin is the state's largest district, and I'm here representing the 37,000 students, 8,000 staff, and nearly 50 sites," said Cory McIntyre, superintendent of Anoka Hennepin Schools, summarizing his district's fiscal picture and listing a series of new cost pressures. "When you add up the cross subsidies ... it's about $50,000,000 of shortfall for us."

Why it matters: officials said state-funded pilot programs and new employer obligations have reduced operating flexibility and, in some districts, already bumped budgets into multi‑million‑dollar deficits. Witnesses urged the Legislature to either fully fund mandates or give districts more flexibility to prioritize local needs.

Most significant details

- Anoka Hennepin (McIntyre) reported an opening structural shortfall that the district estimates at roughly $50 million when special education and multilingual cross‑subsidies are included; the district cut roughly $14 million at its central office last year — about 250 positions — and still faces about $12 million of additional pressure. McIntyre said the district estimates a $2,400,000 shortfall if state support for summer unemployment is not continued and a $2,600,000 cost to districts for paid leave. He added: "1% on the formula for us is about $3,000,000."

- Prior Lake‑Savage (Michael Thomas) said the district projects roughly a $4,000,000 deficit next year and that expenses are growing at "at least 5% or more" annually while revenues rise only about 2.5%–3%.

- Minnetonka (David Law) described a large local investment in 2023 and warned that a portion of the state investments did not flow to employee compensation. Law said Minnetonka faces about $18,000,000 in cuts over the next six years and noted the district spent about $750,000 on summer unemployment last year.

- Rochester business manager John Carlson said his district could face a roughly $1,000,000 bill if state funding for summer unemployment runs out; he also estimated a potential payroll tax bill for paid family leave of $788,000 (and up to $1.5 million if the district cannot negotiate a 50/50 split with unions).

- Fergus Falls projected a $240,000 annual liability for expanded unemployment coverage, a $115,000 annual payroll tax for paid family leave, and warned classroom coverage will be difficult given substitute shortages.

- Smaller districts and rural principals described late resignations tied to summer unemployment claims and the staff time required to respond to the increased number of UI notices. Forest Lake reported that 139 employees received summer UI in 2024 at a cost of about $252,000; Jordan Public Schools said it spent about $91,000 in year one and $150,000 in year two of the summer UI benefit.

Discussion versus action

Witnesses repeatedly distinguished program design from funding. Several superintendents and business managers asked the Legislature to continue or provide a clearer funding stream for summer unemployment benefits and to supply funds to cover the employer share of paid family leave. They also asked for more flexibility in how state aid can be used locally. No formal committee action on those funding items occurred at the hearing; the meeting was primarily a listening session.

Voices quoted in the session

- "We acted immediately ... and cut about $14,000,000, about 250 jobs, which is about 35% of our central office, to try to protect the classrooms," Cory McIntyre, superintendent, Anoka Hennepin Schools.

- "If our district were to run out of state funding for the unemployment, we would have an estimated bill due of $1,000,000," John Carlson, chief administrative officer, Rochester Public Schools.

- "This has been a cumulative effect of several years ... In Prior Lake Schools alone, last year, we'd have netted about $11,000,000" if the funding formula had been inflation‑adjusted earlier, Michael Thomas, superintendent, Prior Lake‑Savage Area Schools.

Ending

Committee members acknowledged the breadth of the district testimony and indicated they would use the session to inform legislative work on funding and on potential technical fixes. No bills were taken up during the testimony on funding and employer‑mandated benefits; superintendents urged lawmakers to weigh the fiscal impact of program design before imposing additional obligations on districts.