By Gayle VanVooren
and Byron Higgin
Mascot Editor & Publisher

As reported two weeks ago in The Mascot, Minnesota state officials will use money scheduled to go to state schools to pay for funding shortages.
“State law requires school district payments to be delayed in order to avoid short-term borrowing.”
Now it’s official and the state is withholding state aid payments in an effort to pay their own bills.
“We have to be prepared for the worst,” said a very frustrated Minneota Supt. Dan Deitte.
The payments that appear to be targeted are in March and April, amounting to some $400,000 for Minneota.  
The delayed payments would be restored in either May or June, but the fact that payroll payoffs in June are also in question brings a lot of “what ifs” to the surface.
“Everything is focusing on finances,” added Deitte, who has helped to keep this District financially solvent.”

“The payment delays announced today will only impact school districts that have significant reserves of at least $700 per pupil and payments will be made in full to all districts by May 30, just two-and-a-half months after the payment delays begin,” said Minnesota Education Commissioner Alice Seagren.
The state will delay $423 million in K-12 aid payments this spring. However, the money must be repaid by June.
“The state’s cash flow situation reflects lower than anticipated revenues due to the struggling economy.  These payment delays are required by state law under these circumstances.  We have taken steps to mitigate school district budget difficulties by targeting this action to districts with solid reserve funds,” said Seagren.
In actuality, this is a loan to the state. In Minneota for instance, Superintendent Dan Deitte said the school board can cover the lack of state aid for now, because it has built a fund balance.
“It makes it easier to know the money will be refunded,” the superintendent told The Mascot.
Districts with larger fund balances are affected the most and that list includes Minneota.
Yet, the local school district may have to borrow money until the funds arrive.
And the fund balance dropping low in June is “a big cause of concern”. The cash-flow problem could be more than the District could handle.
With that in mind, negotiating a “line of credit” with an institution may be in the best interest of the District. The money would be available, with no interest involved until it is actually used.
“It’s really a gloom and doom situation,” added Deitte, as he tried to keep his Board abreast of the actions taken by State officials.