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Published September 29 2010

Minnesota delays school funding

For the second time this year, Minnesota is “borrowing” money from public school districts to keep its own cash flow going.

The state will withhold $142 million in school aid this fall, to be repaid without interest come May.

Moorhead, whose aid the state tapped in the first round of delays last spring, will be spared this time. The state didn’t deem Moorhead’s reserves healthy enough to handle the delay. But several other area districts won’t see a chunk of their aid until next spring, including 55.5 percent of aid in Mahnomen.

“We know it’s a tough time, and the state’s using us as a piggy bank,” said Charlie Kyte of the Minnesota Association of School Administrators. “We could whine about it, but it won’t do us any good.”

Last spring, the cash-strapped state withheld an estimated

$423 million in school aid payments for about two months. Those short-term delays came on top of $1.9 million of aid delays this biennium.

Now, the state needs to resort to school aid again, and over a longer stretch. Only districts whose uncommitted reserves exceed $700 times their adjusted number of pupils will chip in. That’s 134 of Minnesota’s 337 districts. The amounts withheld will depend on the size of reserves and investments.

Moorhead, with a 2009 unreserved fund of just over $6 million, will not contend with aid delays this second round. Assistant Superintendent Wayne Kazmierczak said the development is both a relief and cause for concern.

“We know our fund balance is at a level where sustained deficit spending is not an option,” Kazmierczak said.

Dilworth-Glyndon-Felton will also forego delays.

“It’s good for us because I don’t have to give up some of my money for cash flow purposes,” said Superintendent Randy Bruer. But at the end of the day, “I still don’t have enough money in my checking account.”

The district, which borrowed $1.8 million this summer, has about $634,000 in its unreserved fund, or $513 per pupil, compared to, say, $2,841 per student in Barnesville or $4,624 in Mahnomen.

Mahnomen will front the state almost $2.5 million and dip into its reserve to maintain its cash flow. Superintendent Jeff Bisek said the district likely won’t have to borrow money to tide it over.

“It’s going to be a really tight situation for us in terms of cash flow,” Bisek said. On the upside, he said, qualifying to lend the state money is “a sign we’re financially healthy.”

For now, Frazee-Vergas, which is lending the state more than $2.3 million, will watch its expenditures closely, said Superintendent Deron Stender. “We’re hoping we’ll be able to get by on the skinny and not have to borrow.”

Kyte estimates roughly one in five districts that saw their payments delayed in spring had to borrow money.

“We have to go a lot longer without the money this time,” Kyte said. “There’s a greater chance districts might have to go out and borrow.”

Bisek, the Mahnomen superintendent, said the delays foster unsettling uncertainty, even for districts that can handle them.

“The planning is the hard part,” he said. “How do you plan when you don’t know what the future holds?”

Readers can reach Forum reporter Mila Koumpilova at (701) 241-5529