Budget deal draws criticism from education officials

Empty school in Brooklyn Center
The budget deal announced Thursday, July 14, 2011, between Gov. Mark Dayton and GOP leaders will defer approximately 40 percent of all school payments into the next fiscal year as a way to help the state's books appear balanced. Borrowing against schools to that extent has never before been done in Minnesota. The announcement draws concern and criticism from some education officials.
MPR Photo/Tom Weber

Education officials across the state are frustrated and even angry that the budget agreement reached Thursday will include delaying even more payments to schools than first proposed in February.

Exact amounts are yet unknown, but approximately 40 percent of all school payments will be deferred into the next fiscal year as a way to help the state's books appear balanced. Borrowing against schools to that extent has never before been done in Minnesota.

Reactions to the deal showed clear disdain from education officials over the idea of delaying even more payments to public schools.

In northern Minnesota, Roseau School District Superintendent Larry Guggisberg said the deal means his district will receive 60 percent of its funding, but still be on the hook for 100 percent of its bills.

He's made cuts in each of his ten years at the helm in Roseau, Guggisberg said.

"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 said.

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He's not alone. Schools had already been borrowing in record amounts because of last year's payment delay of 30 percent.

The 40-percent deferment represents at least $2 billion in state aid to schools, and accounts for nearly half of the state's entire $5 billion dollar deficit.

One glimmer of good news is that the deal reached includes additional funding on the state's per-pupil formula, said Charlie Kyte, who lobbies on behalf of school superintendents.

That should give schools enough extra money to cover the costs of borrowing and accessing other financing, Kyte said, but adds 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," Kyte 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."

Also frustrated are some of the lawmakers who will soon vote on the plan. Mindy Greiling of Roseville, the top-ranking Democrat on the House education finance committee, tweeted that she will not support the plan.

Not only does it create more debt, Greiling said it 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," Greiling 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, said she preferred a plan that would allow slot machines at race tracks to raise funds to pay back schools. However, gambling was not included in the deal announced Thursday. Olson said 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," Olson said. "And so, I'm reluctant to add any more burden to them at this point - especially at that level."

Olson hopes to find a way to help charter schools deal with the shift — those schools don't have access to the same low-interest loans that public school districts do, and usually incur higher interest rates.