State wants $2M from
The State of Minnesota plans to ‘borrow’ $2 million from the Blue Earth Area School District, to help balance the state’s budget deficit.
Superintendent Dale Brandsoy explained the state’s plan to the BEA School Board last Monday night.
“According to state statute, they have the right to do this – borrow from schools by withholding aid payments,” Brandsoy says. “We have received the official notice that they intend to exercise this right.”
He explained that the state will delay aid payments to BEA, starting with the Sept. 15 payment. They will hold back paying $2,081,337 in state aid, but will pay it all back – without any interest – in May.
Brandsoy says the state will withhold a total of $83 million from 140 of Minnesota’s 340 districts.
“They are ‘borrowing’ this money from any school district which has reserve fund balances which total at least $700 per pupil unit,” Brandsoy explains. “Blue Earth Area is one of those districts with adequate fund balances.”
He says the board has always tried to keep two months worth of expenses in their fund balance.
Now, with the state withholding payments, Brandsoy says the district will have to keep a close watch on the fund balances, and may have to find creative ways to keep paying the bills.
Brandsoy says the district may have to look at borrowing funds after January sometime, in order to make it until May and the full repayment from the state.
“We are quite sure that repayment from the state will happen by the end of May,” Brandsoy says. “And it will be for the full amount withheld, just without any interest.”
Brandsoy says the $2 million is an estimate at this time, because it is based on the fund balances as of June 30, 2009.
To read the rest of this story, see this week’s Register.