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State may delay millions in area school payments

By Staff | Jan 25, 2010

The state’s financial woes will have local educators holding their breath for the next couple of months.

A bleak economic picture was painted for those attending the Minnesota School Board Association’s leadership conference held Jan. 13-14 in Minneapolis.

While the event offered many useful and helpful workshops, United South Central Superintendent Jerry Jensen says news of the state’s expected revenue shortfall in coming months was the “gloom and doom” portion of the conference.

Board chairperson Christie Wetzel agrees.

“It was just kind of a dark cloud hanging over the conference,” she says.

Jensen says there is an “obscure law” that allows the state to borrow money from school districts in tough times.

The state withholding aid isn’t a novel idea.

Districts in the past received 90 percent of payments in a calendar year with the remainder paid the following year.

Now, that has been changed to a 73 and 27 percent ratio.

Under the current proposal, the state would withhold state aid payments in March and April, and perhaps May.

Districts would be repaid the money in June.

Jensen calculates the maximum amount withheld from his district would be $1.063 million.

“In actuality it may be $400,000 to $500,000. It looks like we will be able to weather the storm,” he says. “Fortunately we had just borrowed money we can rely on if we need to.”

Anticipating the state’s financial problems would continue, USC officials took advantage of a state program and borrowed $600,000. The district also has reserves of slightly more than $1 million.

To read more of this story, see this week’s Register.