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The state's newly minted education finance bill hit a number of sweet spots for St. Paul Public Schools: $52 million worth of new money for the 2023-24 school year alone.

Yet the state's second-largest district is projected to still come up short on the budget front, requiring it to use rainy-day funds to fill a looming deficit.

Enrollment again is tumbling, contract costs are certain to rise, positions funded previously by federal COVID-relief money now will be covered through the general fund. New investments are in the works, too, including a recently announced East African magnet school.

That could lead to a potential draw on reserves of $24.6 million, under a budget outline presented to school board members last week. This on the heels of what has been described as a historic investment in schools by state leaders.

Yet St. Paul's predicament is no surprise to Scott Croonquist, executive director of the Association of Metropolitan School Districts. He said inflation continues to drive up costs, federal relief funds are running out and most of the state's schools are losing students.

"The reality is our school districts are still going to be in the situation where budgets are very tight," Croonquist said, adding enrollment declines are especially harmful because it's hard to make cuts at the same pace.

St. Paul is projecting a loss of 800 students — resulting in a $12.8 million hit to the 2023-24 budget, said Tom Sager, the district's executive chief of financial services. He plans to submit a draft budget to board members on June 6 and then a final budget for board action on June 20.

The district does not yet have a price tag for the total 2023-24 budget. Its budget for this school year was about $962 million.

Last week's review of budget parameters came later than usual, but school-by-school allocations have been shared at the building level. At J.J. Hill Montessori Magnet School in the Summit-University area, families are not happy.

Of particular concern is the elimination of a Children's House classroom that serves preschoolers and kindergartners. That has put at risk the least-senior of the teachers, who parents say not only is popular but also is the school's lone Black teacher. They question the district's commitment to hiring and retaining teachers of color.

Parents also noted during last week's board meeting that J.J. Hill has a preschool waitlist.

The district has countered that the school's enrollment has been on a downturn and that St. Paul has 500 students on the preK waitlist districtwide. Priority is given to students who qualify for free or reduced price lunches or other need-based criteria, officials say, and J.J. Hill's percentages are lower than that of the district overall.

Amanda Coleman, a parent with a child at the school and another on the kindergarten waitlist, told board members it would be devastating to lose an "incredible educator" by spreading the 20 Children's House seats across the district.

"I don't want to regret my decision, but our names are back in the hat at Great River," Coleman said, referring to a Montessori charter school in the city.

Board Member Chauntyll Allen said emotions aside, she hopes to learn more about building allocations and how individual schools are doing with math and literacy scores, especially with the federal COVID funds expiring in September 2024.

"We want to be sure that we're being equitable and investing in spaces where we know that students are struggling," she said.

She also wanted to know more about current and projected enrollment.

Sager said a good sign was student numbers appeared to be stabilizing. St. Paul has been losing 2 to 3 % of its students during the course of recent school years, he said, but this year the decline was less than 1 %.

"I'm cautiously optimistic," he said, noting enrollment is one of five pillars of the annual budget.