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Minneapolis Foreclosures Have Cost Public Schools $150 Million, Study Says

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The housing crisis has cost Minneapolis Public Schools $150 million in state funding as students were forced to move from the area after their families' homes were foreclosed, according to a new report.

The report, by nonprofit advocacy group Minnesota Neighborhoods Organizing for Change, found that there have been more than 13,000 foreclosures in Minneapolis since 2006, leading to an estimated loss of 4,000 students from MPS. The majority of state funding for school districts is based on enrollment numbers.

Those figures are derived from research by the Center for Urban and Regional Affairs at the University of Minnesota that indicates 58 percent of households moved away from MPS zones after foreclosure and enrolled in other school districts.

Foreclosures in Minnesota also disproportionately affected homes with school children -- 17 percent of all Minneapolis households have children in MPS, while 39 percent of foreclosures in the city affected a household with a child in MPS, according to the CURA research cited in the NOC study.

The NOC report contends that banks, particularly Wells Fargo and U.S. Bank have driven the housing crisis in Minneapolis through their combined foreclosures of more than 500 homes in Minneapolis in the last year, costing MPS an estimated $47 million in state funding.

A spokesperson for U.S. Bank, however, told KARE that the NOC foreclosures figures are dubious, arguing that U.S. Bank only served as a trustee for many properties.

Wells Fargo issued a statement noting that it prioritizes foreclosure prevention and will continue to work directly with customers to do so, according to Minnesota Public Radio.

Johnny Jones Jr., an NOC supporter and father of two, told KSTP that banks must be more open to loan modifications for families facing foreclosure.

"If they don't, our kids are going to end up in jail and prison," Jones said. "They're not going to go to school. They're going to drop out."

NOC is calling for several changes to state policy, including adopting a foreclosure mediation program, requiring mortgage providers to submit a disclosure affidavit indicating why it couldn't modify a loan on a foreclosed home and having local governments, school boards and public agencies require "responsible lender criteria."

NOC leaders will present its findings to the Minneapolis school board Tuesday. School officials say they comment after they review the NOC's findings, KSTP reports.

The report on Minneapolis comes amid large statewide budget cuts, forcing districts to seek out lenders for funding. In July, Gov. Mark Dayton signed a budget to end a 20-day government shutdown that in part delayed another $700 million in payments to schools.

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