School District Raises Teacher Pay With No Money, Runs Massive Deficit

Many school districts in America have no economic responsibility to taxpayers. One school district in Minnesota gave teachers raises without having any money to do it. Now they face a budget deficit in the millions.


Shakopee Public Schools is facing a $2.5 million projected budget deficit for its 2020-2021 school year.

District officials attribute the shortfall to an increase in employee pay and benefits and a struggle to gain enough funding from the state to keep pace with increases in expenditures. 

The shortfall is projected to put the district’s unassigned fund balance at about $1 million at the end of next year, which is $7 million lower than the fund balance the district should be operating under, according to the district’s own fund balance policy, which says the district should aim for a general fund balance that hovers between 8 and 12% of the annual budget.

The 2019-2021 teachers’ contract, approved by the Shakopee School Board in a unanimous vote Jan. 6, includes a 1% pay raise and 10% increase in health insurance contributions for teachers during the 2019-2020 school year, and a 3.25% pay raise and 8% increase in insurance contributions the following year. That means the starting salary for a new teacher in Shakopee will go from $39,834 during the 2019-2020 school year to $41,129 for the 2020-2021 school year. Those salaries are a couple years behind the surrounding districts’ settlement contracts.

Source: SW News Media


Published by Hoosier Econ

Located out of Central Indiana. Blogger of economics, politics and societal trends.

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