Budget pinches schools
Princeton Superintendent of Schools Richard Lahn is disappointed in the Minnesota Legislature.
He fears that the budget deal approved last Tuesday by Gov. Mark Dayton and House and Senate Republicans will have effects on the school district for years to come.
That’s because the Legislature is balancing the budget in part by withholding aid to Minnesota’s school districts. As a matter of fact, the state is withholding 40 percent of the money earmarked for education funding. That’s money that every school district across the state was counting on to fund its operations during the 2011-12 school year.
In Princeton, that amounts to $9.57 million, Lahn said. The withholding comes on the heels of a 30 percent withholding a year ago. That measure cost Princeton an estimated $6.8 million last year, Lahn said. Add it all up and the state has deferred paying the Princeton School District over $15 million over the course of the past two years with no plan in place to pay it back.
The Legislature calls the practice a funding shift. Lahn calls it bad public policy.
“It will not solve the budget problems, it just postpones them to a later time,” Lahn said.
And the budget shift comes with repercussions for many of the state’s school districts.
In Princeton, the new state budget forces the district to borrow money to pay its bills.
The Princeton School District is being funded by the state in 2011-12 to the tune of $22.6 million, Lahn said. Holding back 40 percent of that funding amounts to $9.57 million.
Lahn says the state’s superintendents believe the budget plan is being carried on the backs of Minnesota’s students.
“We’re getting 60 percent of our revenue, but still have 100 percent of our bills to pay,” Lahn said. “That causes a problem.”
In Princeton, that’s a cash flow problem.
When the budget was passed, the first thing school district officials did was run a cash flow analysis, Lahn said.
“We should be good until the first of the year,” he said.
The problem is, the school year runs through June. After the first of the year we project we’ll need to borrow $1.7 million to cover our cash flow for the rest of the year, he said.
“That’s very unfortunate because it puts us in a pickle as we just try to keep going,” Lahn said. “For a lot of school districts, keeping operational will be a challenge.”
The Princeton School District has a line of credit with a lending institution based in Green Bay, Wis. The district has access to $2.3 million at a very good interest rate, Lahn said.
Using that line of credit is not desirable to many on the school board because the district would have to pay 2 percent interest on the money borrowed to offset what the state is holding back.
“This all has a negative impact on the quality of education we are able to offer our kids,” Lahn said.
The budget shift is a temporary fix and it hurts kids. Unfortunately there’s nothing school district administrators or the Board of Education can do about it, he said.
