The 2020 legislative session ended Sunday, May 17 with the prospects of a session special extremely likely. Numerous omnibus bills were passed over the last weekend on topics such as higher education, agriculture, transportation, health and human services but several larger bills were not finished, primarily taxes and bonding. So, another special session was presumed assuming they could reach an agreement on these bills.
The governor called for a special session beginning on Friday, June 12. The first order of business focused around the governor’s action to extend his peacetime emergency powers, which was a matter of lengthy debate with the House and Senate Republicans. Attempts to remove those powers did not pass and legislators are now focused on finishing the bills that failed to pass at the end of the regular session. In addition, because of the killing of George Floyd, several different bills to reform policing practices are advancing during this special session.
Education Finance bill passes, Education Policy bill stalled
The legislature passed and the Governor signed, HF4415, the Omnibus Education Finance bill, This legislation includes provisions to address issues related to the transition to distance learning but did not include a House priority, the requirement to pay hourly school district employees. In summary, the bill included provisions to allow MDE to waive requirements related to testing, school aid formula adjustments that would be lost due to COVID-19 closures; limited fund transfer flexibility and forecast adjustments.
The legislature had finalized an education policy bill which included policy provisions agreed to by the House and Senate and did not have opposition. However, because a provision regarding respectful meal policy was not included, the debate in the House stalled the bill the last night of the session. Although the House seemed to have gotten past this controversy, they simply ran out of time to get the bill processed.
This bill language was reintroduced during special session and we expect this will be one of the bills advanced.
In early May, Minnesota Management and Budget (MMB) provided legislators with an updated budget projection showing we may be faced with an estimated deficit of $2.426 billion. However, this is not an official forecast and MMB cautioned policymakers that given the uncertainty about how long the pandemic will last, this projection will remain volatile until we get a more definitive budget outlook when an official forecast is released early December.
Regardless, this projection raised concerns about what this could mean for public education funding. While it is much too early to predict what could happen, I will note the state currently has $2.359 in the budget reserve. In addition, Minnesota received $2 billion in federal COVID relief funds. While this funding cannot replace lost revenues, it could help alleviate other spending pressures.
And, in past periods of budget deficits, school aid payment shifts and property tax recognition shifts have been another tool policymakers have used to mitigate budget deficits. Lastly, although the Governor has unallotment powers he cannot avail himself of those powers until the budget reserve has been depleted so this most likely would be a measure utilized as a last resort.