Minneapolis Public Schools will use the last of its reserves and then some during next school year if it does not make substantial budget cuts or receive additional state or federal revenue. This is according to the district鈥檚 , a five year financial projection that the district prepares each year, which was presented to the school board鈥檚 finance committee on Tuesday evening.

The district is projecting an $84 million budget deficit in the 2025-26 school year, followed by deficits reaching $100 million in the next four years.

At the end of next school year, the pro forma predicts a general fund balance of -$14.9 million, which is -2.1% of the district鈥檚 operating expenses. This is just above the -2.5% that would signify 鈥� and lead to mandated state intervention. If voters approve a $20 million increase in the operating capital levy in November, the -2.5% trigger would still be reached in the 2026-27 school year without additional changes.

The dire outlook comes despite the district making more optimistic assumptions about its revenues and costs compared to previous years. The district assumes enrollment will decrease by one percentage point less each year than it forecasted in last year鈥檚 pro forma because of a one-time increase in kindergarten enrollment this year. John Clinton, Minneapolis Public Schools鈥� executive director of finance, told board members he did not know what the district鈥檚 current enrollment is, nor the size of the current kindergarten class, when asked.

The district has had a growing number of new to country students enrolling in the district the past two school years. The district does not track immigration status of students, but last year,聽聽it had about 3,700 newcomer students enrolled in the district, most whose home language is Spanish.

The district鈥檚 funding is primarily based on enrollment, so higher enrollment projections mean higher revenue for the district.

Newcomer students whose home language is not English receive substantial support from the district to learn English. The state requires the district to provide these services but 聽to the district. This year, the district expects to聽 on support for English Learners than it receives in state aid for the services.

In the pro forma, the district assumes that overall its costs will increase at 2% per year, slower than the 4% rate it assumed in last year鈥檚 pro forma. The district also assumes that as enrollment declines, the number of licensed teachers it employs will decline, according to Clinton.

The district assumes that it will have an annual 2.5% increase in labor costs, the same assumption it made in its previous pro forma. The most recent contracts with teachers and education support professionals, the district鈥檚 two largest employee groups, included annualized cost increases of approximately 12% over the two years of the contracts, a much bigger cost than the projected 2.5%.

The district anticipates ending the current school year with $69 million in its general fund balance. This assumes that it ended last fiscal year with $154 million in its general fund balance, an amount nearly $13 million more than what the district had expected. In monthly financial statements presented to the school board in September, the district showed its general fund balance at the end of last year was about $90 million. Clinton told the board that the fluctuating estimate of the general fund balance is because of how the district is funded.

The school board reaffirmed its policy governing the district鈥檚 reserves last spring. This policy requires the district to maintain 8% of its operating expenses in its reserves. Based on its current expenses, this policy means the district must hold about $57 million in its unassigned general fund balance.

To meet its projected fund balance for the end of this fiscal year will require the district to limit its use of reserves to $55 million this year, and have a 4.75% vacancy rate to realize nearly $24 million in vacancy savings. Vacancy savings are funds the district budgets for, but believes it will not spend because it is unable to hire staff to fill the positions. At the school level, the majority of the聽聽are for staff who serve special education students and students who attend Northside schools. The district鈥檚聽聽is 4%.

How the district and school board will balance the budget next school year remains unknown. The pro forma is a financial projection but does not include budget recommendations. The projection sets a baseline for the district administration and board as they develop the budget for the upcoming school year.

This story was originally published on .

Loans were repeatedly described as a 鈥渓ifetime sentence鈥� in interviews with 100 degree holders. For those enrolled in income-driven enrollment plans that stretch on for upwards of 20 years, growing balances are 鈥渟hackles on their ankle,鈥� and 鈥渓ike Jim Crow,鈥� with virtually no chance of total repayment.

Health scares, job insecurity and refinancing homes or vehicles with high debt-to-income ratios have derailed borrowers鈥� futures and compounded stress, according to the , 鈥淛im Crow Debt: How Black Borrowers Experience Student Loans鈥�. Many feared the only way out from under would be, 鈥渢aking it to my grave鈥� or 鈥渨hen I die.鈥�

Many of the 1,300 Black student loan borrowers are unable to access economic freedom because of their debt. An overwhelming majority cannot sustain savings, according to the advocacy nonprofit.

The majority, 66 percent, regret taking loans in the first place. Only in income-driven plans 鈥� of 2 million who鈥檝e made payments for over 20 years 鈥� have ever had loans cancelled.

It鈥檚 been that Black students 鈥� who because of , are unable to tap into generational wealth 鈥� borrow more and repay at slower rates than peers of other races. 

This report is the first national look at the day-day toll that debt has on Black families. 

It鈥檚 also the first to explore borrower-identified policy solutions, like doubling federal Pell Grants, lower interest rates and realistic debt cancellation. 

鈥淭his is not about individuals making the wrong choices, because they didn’t have good choices to make,鈥� said Victoria Jackson, Education Trust鈥檚 federal and state policy lead on college affordability.

Attempting to get loans forgiven through existing programs is also nearly impossible, graduates say.  

One borrower, named Georgia for anonymity, took out $24,000 in 1990 and owes $125,000 today.

鈥淚 have worked at a nonprofit for 27 years and have tried to work with my multiple loan servicers to get public service forgiveness. I only get the runaround,鈥� said Georgia, who like 72 percent of those surveyed by the Education Trust, is enrolled in an income-driven plan. 

鈥淚 tried the Department of Education, my Congress members,鈥� she said. 鈥淚 am 62 years old and do not know how I will retire.鈥� 

Researcher and co-author Jailil Mustaffa Bishop said student loan policy debates are always 鈥渂ased on Black people’s data, but not really involving actual Black people. We weren’t hearing how Black borrowers were framing their problems and expressing the solution.鈥�

Whether by coincidence or fate, the timing of their project 鈥渃ollided鈥� with national discussions around debt cancellation and the urgent need to reform college affordability.

No 鈥榞ood choices鈥�: How policy enables a lifetime of debt

Like many other borrowers, Georgia, struggling to retire, said she received confusing information as to which loans qualified for public service forgiveness or income-driven-repayment. 

With lower monthly payments and cancellation promised after about 25 years, she chose an IDR plan. Thirty-one years later, she has not had any student loans forgiven and her balance has compounded. 

Her experience mirrors that of 2 million borrowers who鈥檝e . A mountain of red tape and convoluted paperwork stands to keep borrowers in 鈥渓ifetime sentences.鈥� 

Intended as a temporary strategy to help borrowers pay down balances post-college, IDR plans rolled out in 1995. Borrowers pay smaller balances, based on income, and debt spreads out over 20-25 years as opposed to the original 10. 

Once borrowers are back on track, perhaps with higher paying career moves years after graduating, they can go back to standard payment plans. 

But getting 鈥渂ack on track鈥� to paying off the original loan has proven impossible, particularly for Black borrowers, with mounting costs of living, racial wealth gaps and stagnant wages. 

鈥淸An IDR plan] provides immediate relief, but it doesn’t offer a solution to borrowers who are looking at a potential lifetime death sentence, as many Black borrowers in our study described 鈥� It just offers a way for them to kind of manage that debt, but not really a solution to pay it off,鈥� co-author Bishop said.

Today, IDR is touted as the primary solution to the student debt crisis, over cancellation or forgiveness.

Yet those in IDR plans rarely see balances go down, only mount with interest. The high debts harm borrowers鈥� chances of buying homes, renting apartments or accessing credit lines 鈥� even more so than those with typical student loan plans. 

鈥淭hose in the study that were actually enrolled in an IDR plan 鈥� more frequently reported that loans were a source of financial stress. They had a negative impact on their overall mental health, as well as a negative impact on their quality of life,鈥� Education Trust researcher and report co-author Jonathan Davis said. 

About a third of graduates surveyed even postponed having a child because of their student loan debt; about half have put off retirement savings. 

Even more striking, 67 percent of those earning $75-100,000 delayed buying a home because of their student loan debt. The number is nearly just as high, 61 percent, for those with graduate degrees, in theory, better positioned in their careers.  

Chronicling the human toll behind current federal loan policies, the report makes the case for race-conscious reform. 

The future of loan policy, as told by borrowers

鈥淚 mean, realistically, I think the [student loan] system is working exactly as we expect it to 鈥� no one鈥檚 surprised that we somehow built a financial aid process and policy and set that up to only consider your annual salary, as if [Black people] all have the same net assets,鈥� one borrower said.

First and foremost among the solutions, with 80 percent surveyed in support, is wide scale debt cancellation. 

Researchers told 社区黑料 that when it came time for cancellation through IDR plans or public service loan forgiveness 鈥� which 鈥� Black borrowers were often disqualified because of technicalities.

Jalil Mustaffa Bishop said the administrative process is intentionally difficult, similar to bankruptcy filing.聽

鈥淭here’s a lot of clauses, really it means that a borrower has one misstep that may derail their whole repayment strategy. And that’s also a part of the design … that was built into student loans to make it really hard to get from under this debt. We should see that as a decision that was made, not just kind of an accident that came into being.鈥� 

Common proposals cap forgiveness at $10,000 or suggest 鈥渕eans-testing鈥�, or limiting who is eligible, for example, to those making under $100,000. Yet Black graduates experience greater wealth gaps and higher debt than any of their peers. 

Limits or caps on forgiveness would 鈥渄isproportionately exclude Black borrowers.鈥� They鈥檙e more likely to have high balances and take on graduate school debt to 鈥渉edge against discrimination鈥� in the workforce, the report cautions. They鈥檙e also least likely to amass wealth long term because of systemic racism. 

Four years after graduation, Black graduates typically owe as white graduates 鈥� a result of racial , and needing more in loans because of generational wealth gaps.

Borrowers and , currently capped at $6,495 annually. The increase would entirely eliminate the need for federal student loans for about 75 percent of families living in poverty, and 85 percent of low-income Black families.  

For years, funding declines drove up university tuition as wages stayed stagnant. Accordingly, fewer and fewer families can afford higher education.

And 鈥渢he purchasing power of the Pell Grant, the nation’s most important college grant, has declined significantly,鈥� Education Trust policy expert Jackson said.

The National Study on Black Student Loans research team will roll out more reports on specific populations and issues within the student debt crisis, like Black women and parent borrowers. They鈥檙e also in the process of building a data hub for students, policymakers and advocates to explore research, solutions and students鈥� lived experiences. 

Black borrowers鈥� experiences also point to a need for transparent loan counseling, particularly when facing income-driven plans that compound for decades with lower monthly payments.

鈥淲e still found that those in plans 鈥� that by design are supposed to help you better manage your loan repayments 鈥� are unable to afford basic necessities like food, rent, healthcare, contributing to saving, childcare鈥� We want to humanize that. While these plans by intent were designed to do one thing for black borrowers in our study, they have not yet proved to meet that intention,鈥� report co-author Jonathan Davis said.

Disclosure: Marianna McMurdock was an intern at the Education Trust-West in the summer of 2020.