Educators fear payment delays may become permanent cuts

Minnesota school officials say they're worried a delay of more than $1 billion in state education funding could become a permanent cut.

Gov. Tim Pawlenty used the delay to help balance the state budget after the governor and DFL lawmakers couldn't agree on a budget solution. Some lawmakers agree it may be very hard to make school districts whole again.

Like most Minnesota schools, the Anoka-Hennepin School District is having a tough time balancing its books. Last year, the school district cut $16 million from its budget. This year, the schools are projected to be $18 million, or a little more than 4 percent, short.

School officials in the state's largest district have been forced to cut staff, close schools and are asking voters to renew a property tax levy that generates $8 million a year. Anoka-Hennepin School Superintendent Dennis Carlson said he's not confident that the levy question will pass next month.

"If you look at an unemployment map in the state of Minnesota, in terms of the metro area, we're among the worst hit," Carlson said. "We're always hopeful, but this is not the time when you want to be in front of the voters in this type of economic climate."

Carlson said not all of the district's money goes to teachers and classrooms, and he said some money is needed to pay off interest from short-term borrowing. He said Gov. Pawlenty's decision to delay school payments forced Anoka-Hennepin to borrow to meet cash flow needs.

"The shift in funding means that we have to take about a quarter of a million dollars out of our budget to pay for the interest of borrowing money," he said.

"He does not have the authority once he's no longer governor to pay the money back."

In July, Pawlenty announced he was delaying $1.2 billion in state aid to schools as a part of his plan to balance the state's budget. It's an accounting trick that shifts or delays a portion of state school payments until the next budget cycle to balance the current budget. It has been done before when times were tough and in fact, the House and Senate proposed a shift last session.

What makes this year different is that Pawlenty did it on his own without the Legislature's approval. That action has set off a disagreement among education experts at the Capitol as to whether the money can be paid back without legislative action. Some say the money will be paid back at the beginning of the next fiscal year, but others say it will evaporate if the Legislature doesn't take action.

"He does not have the authority once he's no longer governor to pay the money back," said DFL Senate Majority Leader Larry Pogemiller.

Pogemiller insists that Pawlenty didn't delay school funding -- he cut it. He said only the Legislature, not the governor, has decision-making power over how to spend money. He said Pawlenty can't promise the money will be paid back when he won't be in office when the bill is set to come due.

"Rhetorically, he apparently is saying someday that money will get paid back," Pogemiller said. "He'll no longer be governor but someday it will be paid back. I think people need to think through that. If you already know you're going to have a $4 to $7 billion deficit. Somebody promising that you'll get paid back someday? I think you should not take that to the bank."

But Pawlenty administration officials cite state law that says any deferred payments from unallotment will be paid back at the start of the next fiscal year. Still, one budget expert said it would be best if the Legislature passed a law setting up a mechanism for the funding to be paid back.

For his part, Pawlenty said he's confident the money will be there for schools whether the Legislature takes action or not.

"We believe we can do it without it, but if they want to do an extra measure of comfort or assurance, the Legislature can do it twice by putting it into law that it's going to get paid," Pawlenty said.

Some education advocates say they'll lobby the Legislature to guarantee the money will be paid back. Scott Croonquist, with the Association of Metropolitan School Districts, said legislative action will create some certainty for schools.

"We think that legislators understand that schools cannot handle that kind of cut," Croonquist said. "It would amount to a 17 percent reduction in state aid. We're hoping that everyone understands that that is not an option and schools can't absorb a cut."

DFL House Speaker Margaret Anderson Kelliher, who is running for governor, said it's her intention to guarantee that the shift gets paid back over time. But she said the state's budget problems will make it difficult to pay it back immediately.

When the state delayed payments in 1983, it took 15 years to pay it all back.