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[CAR ENGINE RUMBLING] TIM PUGMIRE: Cost cutting at Richfield High School means more students are walking home after classes or waiting for rides. School district officials recently eliminated the long available option of free bus rides for secondary students living within 2 miles of school. Those students must now pay $170 a year to ride the school bus. Sophomore Pedro Delacruz is one of the students who's no longer riding.

PEDRO DELACRUZ: We think that's bad because a lot of people have to find another way to get here. A lot of people have to walk. And it's bad for all the students.

TIM PUGMIRE: After local residents defeated a request for additional tax support last fall, Richfield School officials had to find ways to fill a projected $2.5 million hole in next year's budget. The district spent $1.3 million last year or about 4% of its operating budget to run buses. Transportation is a budget category not directly connected to the classroom, which makes it vulnerable. But Superintendent Barbara Devlin says none of the cuts were easy.

BARBARA DEVLIN: We have heard from some people that, that is an inconvenience. However, we did have also many parents saying, we'd rather have you cut things like that than cut classroom programs.

TIM PUGMIRE: School districts throughout the state have been making similar reductions. Combined cuts among Twin Cities metro area districts are expected to top $100 million. Scott Croonquist, Executive Director of the Association of Metropolitan School Districts, blames the bleak financial picture on less than expected K-12 funding last year from the state legislature. That modest inflationary increase came two years after lawmakers pumped a whopping $1.3 billion of new money into public schools.

SCOTT CROONQUIST: You can't provide a decent increase one year and then think that schools are going to be able to live off that for four years. The fact of the matter is that costs go up every year and that unless the legislature maintains the type of commitment that they showed in 1999, the result will in fact be reduced services or cuts to education.

TIM PUGMIRE: Croonquist's view is echoed by urban and rural educators alike as they try to explain the current school budget mess. But not everyone is buying the explanation. Governor Ventura, for one, says he's sick and tired of hearing school officials talk about cuts.

VENTURA: They weren't cut. They got more money than they got the year before. That's not a cut. They just didn't get everything they asked for.

TIM PUGMIRE: Ventura championed the 1999 boost in school spending, but now he's quick to criticize the ever-expanding state cost for education. The Minnesota Department of Children, Families, and Learning says school district revenues for this year, including all federal, state and local funding, totaled $7.9 billion. That's about $9,200 for each of Minnesota's 854,000 students. Over the last 10 years, the total revenue has grown by nearly 72% while enrollment increased just 11%. Ventura questions district's ability to live within their means.

VENTURA: To do the same job you just did a year earlier, nothing more, the same job, you got more money beyond inflation, well beyond inflation, why would it require any cuts? Where is the money going?

TIM PUGMIRE: School leaders say costs are increasing much faster than inflation. State records show school districts spent $6.3 billion last year on operating expenses. Another 1.9 billion went toward buildings and other capital costs. Gas prices and drivers salaries pushed up transportation expenditures statewide 5.5% last year. The cost of heat, electricity, and other building operations rose 13%. Lunchroom costs grew by 6%, and the price of teaching disabled students jumped 7.5% from the previous year. Large and small school districts are also losing state money because enrollments are dropping. Vernie Hasbergen of the Minnesota Rural Education Association says fewer students don't lower expenses.

VERNIE HASBERGEN: You might lose a child, or two, or three out of your third grade section, but it's not enough to really cut your costs and reduce a teacher. And so what you've had is this gradual erosion of your revenue-generating ability because you're gradually losing kids.

TIM PUGMIRE: State and federal mandates drive much of the cost of public education, but each school district still controls its biggest expense. Roughly 80% of operational costs are employee salaries and benefits. There are administrators, bus drivers, coordinators, instructional aides, nurses, psychologists, and various support staff. But most are licensed teachers.

Officials with the Teachers Union Education Minnesota and the Minnesota School Boards Association and say teacher salaries are increasing in average 2.8% this year and 2.5% next year. Add in the benefits, and you've got average increases of 9.6% over the two years. That's marginally higher than the last few bargaining rounds. Morgan Brown of the Watchdog Minnesota education league says many school districts, even those with big budget shortfalls, continue to spend more than they have on salaries.

MORGAN BROWN: They're still signing teacher contracts they can't afford. And that's leading to making additional cuts, in some cases teacher layoffs. And I think a lot of parents, it doesn't make sense to sign a large teacher contract and then pay for it by laying off teachers.

TIM PUGMIRE: Brown says teachers should share the responsibility of budget cuts with smaller settlements. But a report two years ago from the Office of the Legislative Auditor showed increased wages for teachers have not been a major factor in the growth of school spending. It says while some individual teachers got raises above inflation during the 1990s, the statewide average actually lagged inflation due to retirements and the hiring of young, less expensive replacements.

The National Education Association ranks Minnesota 17th in average teacher salaries at just over $42,000. That's $1,500 below the national average. Education Minnesota president, Judy Schaubach, says the salaries aren't enough to attract and retain quality teachers.

JUDY SCHAUBACH: The uncertainty that's out there, the challenge of difficult kids, and growing class size and lack of supplies and support just makes the kind of environment where it will be more and more challenging to get people to stay in the profession.

TIM PUGMIRE: The latest census bureau survey of local government finances ranks Minnesota at 18th in the nation for total per pupil spending. Economic pressures and state budget shortages will likely prevent Minnesota from gaining much ground on the list in the next few years. Meanwhile, many cash-strapped school districts are already planning to ask voters for help again this fall. I'm Tim Pugmire, Minnesota Public Radio.