Funding Delays Could Hurt Local School District

January 27, 2010

A five billion dollar budget deficit has created plenty of cuts for Minnesota school districts already.And now the state will delay payments to certain districts as well. As much as 423 million dollars in Minnesota school aid payments could be delayed to help Minnesota pay its bills.

Nicollet is one of 231 districts the state has slated to withhold payments from March until May.Tony Boyer says, "In this case the withholding of money is directed at districts who do have fund balances."

Boyer says districts across the state have already had funds withheld, about 27 percent of their budgets.And now those districts that are in good shape financially, like New Ulm and Mankato, will have additional money withheld.

School administrators expect to get that money back in May, just in time for the summer payroll once the school year ends.However, they are worried about the first withholding.Tony Boyer says, "We’re supposed to get that money back in fiscal ’11, which begins July 1.

But we’ve never seen a schedule for the payback, so we don’t know when it’s going to come back and to be honest, we do not know if it will come back."The recent delays stem from an anticipated state cash shortage.

The state will use the withheld money to pay its bills now, and then take future revenue and give it back to the schools.State law requires Governor Pawlenty’s administration to withhold the school money before turning to short-term borrowing.Though that has just meant borrowing from the school districts.

Boyer says, "A lot of school districts had to go out and borrow money so they could cash flow their budget. We didn’t have to, but a lot of districts did."Ryan Gustafson, News 12.