State shift causes school cash flow issues

Published 11:12 am Monday, July 18, 2011

If state legislators have their way, school districts across Minnesota are going to face some cash problems.

A proposed $700 million shift in state aid payments could be passed as soon as Monday, the latest in a long history of shifted school payments.

“It’s going to be detrimental from a cash flow standpoint,” said Mark Stotts, Austin Public Schools finance and operations director.

The 2010 budget shift called for making 70 percent of the first budget year’s payment out to schools and then paying off the remainder over the next two years. This shift will call for 60 percent during the first year with the rest paid off in subsequent years. School districts will still get the same revenue, but a district’s cash flow will be negatively impacted.

Austin’s had millions in reserves to cover the shifts in the past, but the recent shift could upset the district’s apple cart. Stotts said the district predicted about $2.5 to $3 million would be available for cash flow next year, but the shifts will prompt a harder look at how Austin can cover costs. Though Austin hasn’t had to borrow money like many school districts statewide, Austin’s school board approved a short-term credit line earlier this spring.

Rural schools may feel more of a hit, as their budgets are smaller. Hayfield Public School officials cut almost $300,000 out of the budget last year, including a full-time teaching position. Lyle Public School officials discussed opening a credit line at their school board meeting last week. Southland and LeRoy/Ostrander Public Schools planned to make small cuts and not fill several teaching positions up for grabs this year.

Though K-12 education largely escaped severe cuts, the shifts mean school districts will feel the budget pinch more than other state agencies.

“It’s definitely putting the state’s problems on the backs of school districts,” Stotts said.