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__ a :~-~~ ~ducati~n __ Key Elements of the Budget Recommendations The Governor's FY 04-05 budget places a priority on protecting Minnesota's school classrooms from the impact of the state's massive budget shortfall while also avoiding increases in additional property taxes, unless they are truly at local option. This budget proposal fulfills both goals: revenues per student are maintained at the current year level, and the proposed budget for K-12 has no net impact on the statewide level of property taxes. In addition, the Governor's budget recommendations implement several measures to increase accountability and strengthen incentives for cost effective operations, and are a first step toward reform of the general education program. Because of the magnitude of the funding changes resulting from these recommendations, the Governor's budget includes a "hold-harmless" provision that will mitigate the short- term impact on school districts. During 2003, the Governor also plans to continue examining the school finance system, to better link achievement, accountability, and financing. A school finance reform plan will be presented to the Legislature in 2004. Key elements of the E-12 budget proposal include: • The Governor's budget caps teaming year pupil units at 1.0. The Learning Year program began as a pilot program in the late 1980s to allow secondary students to accelerate their learning and graduate early. Use of it has expanded to include elementary as well as secondary students, and to include remedial programs as well as accelerated learning. This program provides school. districts with little incentive to improve performance within the regular school day. • Under the current formula for Limited English Proficiency (LEP) funding, districts lack the incentive to ensure that LEP students are teaming the language skills they need to be successful. The longer a student remains in LEP status, the more aid the district receives. The Governor's budget limits LEP funding for each student to five years. • The Governor's plan seeks to improve the fairness of school financing by substantially increasing the fully equalized portion of referendum revenue and by requiring a local contribution for districts accessing equity revenue. • The Governor recommends eliminating the impact of the $415 roll-in on revenues linked to the general education formula allowance. Certain education formulas, such as compensatory, transportation, transportation sparsity and post secondary enrollment options (PSEO) are linked to the general education formula. When the formula allowance was increased by $415 in FY 2003 to reflect the roll-in of referendum revenue, the funding generated by these other formulas automatically increased because of the link to general education funding. The Governor' s budget eliminates the additional 9.9 percent increase caused by this relationship between the formulas. • The Governor proposes a new'"transition revenue" to ensure that districts will not be unduly harmed by the above changes to the general education program. This revenue provides a guarantee that in FY 2004, each district will receive either the amount they received per pupil in FY 2003, or the amount they would have received under current law for FY 2004. • The Governor eliminates statutory growth factors in Special Education, Special Education Excess Cost and Adult Basic Education. Removing these "automatic" increases ensures that decisions will be made each biennial budget, rather than giving some programs a virtual guarantee of increased funding. Governor's 2004-05 Budget