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As Minnesota schools set their budgets for the upcoming academic year, many are facing shortfalls. Districts say the deficits are triggered by inflation, costs associated with new legislative requirements and a looming fiscal cliff as pandemic funds are set to expire in September. 

In Minneapolis and St. Paul, though, plunging enrollment over decades has created a much deeper problem. Minnesota’s school funding system is based on a per-pupil formula, which means when kids choose to learn elsewhere, the thousands of dollars in state and federal funds that go with them is spent elsewhere. 

Minneapolis school board members on Tuesday will meet to talk about how to close a $110 million deficit. It’s a situation that makes it extremely difficult to cut costs fast enough as kids leave and don’t come back.

“We’ve never faced any gap like this one. This is really hard,” Ibrahima Diop, Minneapolis Public Schools senior chief of finance, told MPR News. 

The Minneapolis district has seen its enrollment drop by nearly 20,000 students since 2000-01.

Open enrollment has played a role. The gap between the number of children in the city and the number enrolled in the district has grown significantly in the last two decades. But in recent years that has been less of a factor, and declines have been driven primarily by a fall in the number of school-age children living in the city. 

In 2019, there were more than 55,000 children under the age of 9 living in Minneapolis, but by 2022, that number had dropped to fewer than 43,000. 

“The number of students that we would need to be at full capacity don’t even exist in the city, because we have declining demographics,” Diop told MPR News. 

In St. Paul, there have been similar declines. In the last five years, enrollment has fallen by more than 5,000 students and the district, which is the second-largest in Minnesota, currently enrolls 60 percent of the school-aged children who live in the city. 

In both districts, the percentage of the school-age population in the city and attending the public school district has been shrinking steadily.

Both districts have seen the loss slow. In Minneapolis, kindergarten enrollment, which is a leading indicator of enrollment changes, continues to fall, but the severity of the loss has lessened. District leaders expect total enrollment to stabilize around 23,000 to 24,000. 

In St. Paul, after several years of four-digit student enrollment declines, this year’s loss was a comparative low of 48 students.

District leaders say schools with a focus on language immersion and world cultures grew. Kindergarten enrollment has also expanded for the first time in a decade, something district leaders say is “a direct result of the district’s investment in pre-kindergarten above and beyond the Pre-K funding provided by the state.”

St. Paul superintendent Joe Gothard said the enrollment stabilization was intentional.

“As a district, SPPS has invested significant resources in providing our community with the educational options that families want and students need. This includes high-quality educational programs that respect and reflect the people we serve; and free, full-day pre-kindergarten at over 30 schools across the city.” 

Still, Minneapolis and St. Paul are both in a financial tailspin. 

from the Association of Metropolitan School districts found St. Paul was expecting a budget shortfall of around $108 million. Minneapolis self-reported a $90 million projected deficit that the district now projected at $110 million. 

These are shortfalls exponentially higher than districts of similar sizes. Anoka-Hennepin, for example, which is the largest district in Minnesota, reported a projected shortfall of $24 million. And Rosemount-Apple Valley-Eagan, which in recent years has surpassed Minneapolis as the third largest district in the state, is predicting a $14,000 deficit.

Anoka-Hennepin, the state’s largest district, has managed to entice a larger percentage of local students to its buildings. More than 76 percent of local school-aged kids were enrolled in district schools in the 2022-23 academic year and Anoka-Hennepin’s “capture rate” is higher than the state average. Still, the number of students choosing charters, private or home school options has increased significantly in recent years. 

Overall, growing options for education, an aging population and declining birth rates mean Anoka-Hennepin is expecting enrollment to decrease in the future. 

Like other districts, Anoka-Hennepin is paying attention to housing. In a November board meeting, district leaders said single-family detached units were the only type of housing that brought “any meaningful number of school age children to the district.” 

Even the Rosemount-Apple Valley-Eagan district is expecting a slight, 0.56 percentage-point decrease in enrollment next year. This is after seeing growth in enrollment numbers from 2015 and a plateau following the pandemic. 

“Post-pandemic, the number of students in the state … there has been a slight decline in enrollment statewide,” said Christopher Onyango-Robshaw, the district’s finance coordinator. 

Pandemic funds have helped districts prop up their budgets for a while, but those are running out in September.

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Minneapolis school board members on Tuesday will discuss how to close a $110 million deficit, but that annual effort to close budget gaps masks a much deeper problem in St. Paul and Minneapolis: Enrollment decline is a budget killer, and the kids likely aren’t coming back.

After 20 years of shrinking enrollment, Minneapolis and St. Paul schools face a reckoning

Students get on a school bus in St. Paul.

After 20 years of shrinking enrollment, Minneapolis and St. Paul schools face a reckoning

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