Shutdown Settlement: St. Michael-Albertville Schools Bracing for Funding Shortages

Back in the "good old days," 90 percent of school funding was given to Minnesota school districts to fund their current fiscal year’s operations and 10 percent was deferred until the next year.

Under former Gov. Tim Pawlenty that number dropped to 70 percent given and 30 percent deferred in an attempt to balance large state budget deficits.

Now, if all goes as planned during the Legislature’s special session, state legislators are poised to reduce that amount to its lowest level yet, giving school districts 60 percent of their current year’s funding and deferring the other 40 percent. With tight gridlock between Democratic Governor Mark Dayton and Republican-led state congress on how to balance the $5 billion budget deficit, Governor Dayton agreed to the Republicans' June 30 proposal to balance the budget using the funding shift to bridge much of the remaining gap.

A record number of state school district had to use bonding dollars last school year because they did not have the cash flow to cover the 30 percent of their districts’ operating costs that were deferred. did not have to bond to make up for this shortfall, and didn’t have to pay interest on these loans as many neighboring districts did.

With the 60/40 percent funding shift this school year, St. Michael-Albertville superintendent said their current best guess is that the district will still be able to manage the funding shift without borrowing this year, though they will not know for sure until all legislation is finalized and the state crunches all the numbers.

 “I’m really cautious to make any commitments. Because until the final agreements are known it’s just hard to know for sure,” Behle said. “But it will be very close.”

To help school districts offset the increased costs of borrowing, the current agreement calls for a $50 increase per pupil unit for the coming school year.

Behle said that this shift places the next state budget cycle in a difficult position right from the start, as it will owe school districts an additional $2.1 billion from the 2011-2012 school year plus whatever funding percentage they will owe for the 2012-13 year.

“It’s a significant amount of money that they will owe schools as a result of the shift, so I seriously doubt they will be able to get back to the 90/10 funding formula for many years,” Behle said.

Which means the district, as a result, might have to plan on moving forward without that money.

Looking into the uncertain future of state funding, the school district said it will continue making conservative financial decisions. For this year Behle said they eliminated some positions and reorganized others to save money, such as eliminating the Dean of Students position at the high school and the administrative position at Knights Academy, eliminated a few paraprofessional educator positions and reduced the hours of nine others. They also denied $1.6 million in funding requests for buildings and grounds, instructional equipment, software, supplies and other things, while granting $1.2 million in requests they deemed to be the most pressing.

For Gov. Mark Dayton and state legislators, the budget solution is a plan that neither would have chosen alone but the only thing they could compromise on in the end, as Governor Dayton was not willing to make further cuts and the legislature would not agree to any additional taxes.

"I don't really like pushing all of this down the line any more than anyone else," said Rep. Joe McDonald (R-Delano) of District 19B, which includes the STMA area. "But, we do make some of the reforms we were looking to make in the budget, so that's some progress. The good thing is it looks like we are on track to get our state up and running again."