Shutdown 2011 Category Archive: K-12 education

Budget deal to end shutdown frustrates schools

Posted at 8:09 PM on July 14, 2011 by Paul Tosto (1 Comments)
Filed under: K-12 education

The budget deal that will end the state shutdown will trigger big delays in payments to schools, forcing districts to borrow at a level not seen before in Minnesota.

MPR News reporter Tom Weber has the story.

Reaction to the budget deal has brought a range of response. However there is clear agreement from one group... disdain from education officials over the idea of delaying even more payments to public schools.

The deal means schools will only get about 60-percent of what's owed to them during this fiscal year... the other 40-percent will be paid next fiscal year.

In northern Minnesota, Roseau superintendent Larry Guggisberg says that means receiving 60-percent of his funding... but he still has to pay 100-percent of his bills.

Guggisberg says he's made cuts in each of his ten years at the helm in Roseau.

"We have picked away at it to make sure we stay in a solid financial position, but with this 60/40 I'm pretty confident we're going to have to do borrowing to a greater extent than we've ever had to do before."

Guggisberg is not alone. Schools had already been borrowing in record amounts because of last year's payment delay, which was 30 percent.

Now, at about 40-percent... at least $2 billion in state aid to schools will be delayed... which will account for nearly half of the state's entire $5 billion deficit.

Charles Kyte, who lobbies on behalf of school superintendents, says one glimmer of good news is that the deal reached yesterday also includes a little more funding on the state's per-pupil formula.

He says that should give schools enough extra money to cover the costs of borrowing and accessing other financing, but he says he can't help but wonder if this new record level of borrowing is insurmountable.

"Historically they never borrowed this much from us and they did always pay it back over time, if for no other reason so that they had the money back in our pockets so they could borrow it a second time," he said. "But we're getting to a point where the shifting is so deep, it's going to be very difficult to pay it back and it may simply be our new reality."

The deal for more delayed payments was also met with frustration from lawmakers who will soon vote on the plan.

Mindy Greiling of Roseville is the top-ranking Democrat on the House education finance committee. You could practially hear her screaming through the computer yesterday when she tweeted that she will not support the plan.

Not only does it create more debt, she says it also muddies up the public's understanding of how education finance works in Minnesota.

"A really bad part of borrowing from the schools is that when you pay it back, people seem to think schools got some money, and they didn't," she said. "They're just getting debt paid back, and then they don't get the money they need - so it's a compounding negative for schools."

On the Republican side... Gen Olson, who chairs the education committee in the Senate, says she would have preferred allowing slot machines at race tracks to raise funds to pay back schools... but gambling was not included in the deal announced yesterday.

She says school districts will face even tougher decisions.

"We've got mandates and mechanisms in place that make it very hard for them to control their spending, as well. And so, I'm reluctant to add any more burden to them at this point - especially at that level."

Olson says she hopes to somehow help charter schools deal with the shift... because those schools don't have access to the same low-interest loans that traditional districts do and usually incur higher interest rates with financing when they're forced to borrow.

That's just one of the scores of details that will now have to be worked out among lawmakers ahead of a final vote.

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