Pawlenty's talk of shifting funds has schools worried

Many school officials worry about a potential funding delay, which they say will mean losses for state districts.

By NORMAN DRAPER, Star Tribune

Last update: May 19, 2009 - 8:51 PM

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When Gov. Tim Pawlenty signed a K-12 schools bill into law late Saturday, it froze school funding at $13.7 billion over the next two years.

If there's one positive for schools in such a woeful funding year, it's that many of them prepared next year's budgets assuming they would get no new money from the state. Now school boards can put the finishing touches on their budgets for 2009-2010 and plunge into contract negotiations with their teachers.

But troubling questions remain. Pawlenty said Tuesday he planned to avoid making school budget cuts in his efforts to balance the state's budget. He said, though, that he will likely resort to funding "shifts," which delay some state payments to schools by a year.

The governor said the amount of such shifts has yet to be determined. Still, educators are worried that such a tactic, often derided as a bookkeeping maneuver to make things look better than they really are, could mean real losses for schools.

That's because when state funding doesn't come on time, many schools must borrow money to meet their day-to-day cash flow needs and pay interest on that borrowed money.

"It's like a checkbook balance," said Jeff Solomon, director of finance and operations for Rosemount-Apple Valley-Eagan schools. "If you're only given 80 percent of your paycheck and 20 percent doesn't get paid until next year, then that eats that checkbook balance down."

Schools also lose the investment earnings that state funding would earn them if it got delivered earlier.

"Clearly, it does cause cash flow problems for school districts," said Scott Croonquist, executive director of the Association of Metropolitan School Districts. "The reality is it results in cuts for school districts."

"Might some people refuse to loan [the school districts] money or loan it at higher rates?" wondered Charlie Kyte, executive director of the Minnesota Association of School Administrators.

Still, Kyte said, he is confident schools will eventually get all the money budgeted to them by the state.

Minneapolis schools chief financial officer Peggy Ingison raised another concern, though. She said Pawlenty would have to get approval from next year's Legislature for the payment delays that, in effect, have already been put into place. What, wondered Ingison, happens if the Legislature decides not to approve such shifts?

"It puts us out on a limb," she said. A big funding shift, she said, merely compounds the problem of schools getting no new money while facing increased costs due to inflation.

But according to Curt Yoakum, legislative and communications director with Minnesota Management & Budget, Pawlenty has the authority to delay the payments without legislative authorization.

Soon, school districts will have to throw into this muddled equation teacher contract negotiations. Teacher contracts expire statewide June 30, which means districts must negotiate two-year deals with their school staffs. Such contracts are the main drivers of increased district costs. This year's talks could be especially rough because of the flat state funding.

Tom Dooher, president of the Education Minnesota teachers union, said, "It was challenging last time, and we had some money. Without new revenue, I think it's going to make it even more difficult."

Norman Draper • 612-673-4547

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