School payment delay sets bad precedent

Minnesota Management and Budget, formerly the Department of Finance, announced on Jan. 26 that the state will hold back school aid payments in order to pay the state’s bills this spring.

While administration officials have been hinting that this could happen, I had hoped that it wouldn’t. The formula the administration is using to withhold payments from school districts targets those where prudent, conservative local management produced positive fund balances. I don’t believe the state should treat wellmanaged local districts as if they were the rich uncle to a state government that cannot manage its own finances.

If the idea to use local schools to cover the state’s fiscal problems seems new, it’s because it’s never happened before. Minnesota Management and Budget Commissioner Tom Hanson will invoke a never-before-used Minnesota law, passed a generation ago, to cover Minnesota’s negative cash balance. Statewide, total aid to be withheld in March and April is $423 million. Locally, the impact will cost Staples $1.3 million, or $701 per student, and Verndale $416,654, or $1,155 per student.”

This is the second time in less than 12 months that Minnesota school districts have faced a large cut without legislative approval. Last July, the governor unilaterally cut $1.2 billion with the unallotment shift. Under the new plan, the state would withhold payments once this fiscal year, which ends June 30. However, payments could be withheld again next fall when the new fiscal year is in effect. This new tactic affects 231 of 337 Minnesota districts that were forced to borrow to cover costs because of the previous shift. The average hold back is $689 per student.

The positive cash balances in many districts’ budgets aren’t excess funds, either. Districts use them as cash flow accounts to ensure that funds are available to pay bills - many of which are owed to local businesses that provide goods and services to our schools. What’s more, much of the money comes from property tax collections. No matter what your political leanings, I think we can all agree that the state shouldn’t be trying to fix its problems on the backs of Minnesota property owners.

As everyone knows, the fiscal problems facing Minnesota this year are huge - but it’s hardly the first time our state has faced a deficit. If Minnesota could go for 24 years without invoking this statute, we ought to be able to make the cuts necessary to avoid using it this year as well. A bill is being introduced to repeal this law, and pending review of the exact language, I expect to support it.

Sen. Dan Skogen, (D) Dist. 10, 75 Rve. Dr. Martin Luther King Jr. Blvd. 303 State Office Building, St. Paul, MN 55155; 651-296-5655; sen.dan.skogen@senate.mn