This is an independent financial assessment by Elizabeth Hanke of the State of Minnesota and Mankato Area Public Schools.

Minnesota’s financial outlook and the challenges facing Mankato Area Public Schools may seem like separate issues, but they are driven by the same underlying problem: spending is growing faster than revenue.

Nearly all U.S. states are required to pass “balanced budgets,” but that doesn’t always mean they are structurally balanced long-term.

According to the Minnesota Management and Budget February 2026 Budget & Economic Forecast (p. 14, with supporting tables around p. 68), the state projects revenue growth of about 1.9% annually, while spending grows closer to 2.9% when adjusted for inflation and ongoing costs. That gap, where spending consistently outpaces revenue, creates what economists call a structural imbalance.

Mankato Area Public Schools is facing the same dynamic, but more intensely.

Based on multi-year district trends and forecasts:

• Revenue growth ≈ ~2.0% annually
• Spending growth ≈ ~3.5% annually

👉 That creates a larger structural gap at the local level.

Bottom line:
The state is trending toward pressure.
Our district is feeling it faster.

This isn’t just a question of delay, it’s a question of adequacy. When the response doesn’t match the size of the gap, the imbalance doesn’t go away. It simply shows up later, with fewer options and higher costs.

States and Districts with larger structural deficits:

States

• Illinois: Years of structural imbalance led to near-junk credit ratings and higher borrowing costs
• New Jersey: Repeated downgrades and rising taxes despite a strong economy
• Kansas: Budget shortfalls forced policy reversals and cuts to education

School Districts

• Minneapolis: Enrollment loss + rising costs → closures and staff reductions
• St. Paul: Ongoing deficits → multi-year cycles of cuts
• Chicago: Persistent gaps → borrowing and state intervention
• Detroit: Long-term decline → state takeover and loss of local control

Why This Matters Now

Minnesota is still in a strong position today.

Mankato Area Public Schools is still stable today.

But both are on a trajectory where:

• Spending continues to outpace revenue
• Reserves get used over time
• Harder decisions become unavoidable

The difference is timing.

The state has more runway.
The district has less.

Truth in Accounting publishes comprehensive financial analyses of all 50 states. Their 2025 report is scheduled for release in August 2026. The data shown below reflects 2023 figures for states such as California and Illinois, as 2024 reporting was not yet available. While conditions may have evolved since then, these reports remain a useful tool for understanding long-term structural trends in state finances.

https://www.truthinaccounting.org/

Click to access Financial-State-of-the-States-2025.pdf

Find more related information at:

Minnesota Chamber