Dayton, lawmakers likely to differ on plans to pay back schools

Gov. Mark Dayton hits the road this week to promote his budget plan that proposes raising taxes by $1.8 billion to erase the state's budget deficit and increase funding for schools and economic development.

Democrats in control of the House and Senate are set to release their budget outlines this week and one key spending difference will be in the area of education.

The governor says his budget plan would increase state education spending by $640 million over the next two years. The money would go to early childhood education, K-12 schools and higher education.

However, Dayton's budget plan does not fully pay back what's left of a $2.4 billion K-12 payment delay that was used earlier to help balance the state budget. The accounting shift now stands at about $800 million because some of the balance was paid back due to increased tax collections.

Dayton said he doesn't see the need to pay the balance immediately because there is a mechanism in the law to pay it back if the budget shows a surplus.

"We're on a timely repayment schedule," Dayton said. "To take $800 million now out of everything else and put that into repaying the schools, I think is unsound fiscal policy and unnecessary given the pace that we're repaying the debt."

House Democrats take a different view and are likely to at least pay back a portion of the K-12 school shift.

"Paying back the old bills and paying back the credit card bill is not as fun as giving people additional projects and programs that they're looking for. We have to pay back that credit card bill first. That's the prudent thing to do."

Democrats campaigned on paying back the school shift and they also plan to increase funding for education, said DFL Rep. Paul Marquart of Dilworth, who chairs the House K-12 Finance Committee.

"We can do both," Marquart said. "As I said from the onset, not only can we pay back the school shifts, which we should, and living up to our commitments but invest in creating a path to get our kids to the world's best workforce."

But even House Democrats do not appear poised to pay back the entire school shift. Marquart would only commit to paying back roughly $260 million. He hedged when asked about the other $550 million, and he notes that the money is not directly tied to students in the classroom.

Senate Democrats are set to release their spending priorities on Wednesday. DFL Sen. Chuck Wiger of Maplewood said he does not see the need to pay back the school shift right away. He said doing so would mean less money for All Day kindergarten, special education funding and early childhood education.

"If you put a quarter of a billion into the shift, you're going to have a corresponding reduction in your flexibility to invest in additional programs," Wiger said.

House Republicans have been working to make the K-12 payment delay an issue this session. Republican Rep. Kelby Woodard of Belle Plain said Democrats are scrambling to find a way to meet the campaign promise of paying back the school shift and increasing total funding for schools.

"There's no doubt that they made a lot of promises to people on spending more money," Woodard said. "Paying back the old bills and paying back the credit card bill is not as fun as giving people additional projects and programs that they're looking for. We have to pay back that credit card bill first. That's the prudent thing to do."

Woodard did not offer specifics on how Republicans can erase the deficit and pay back the school shift without raising taxes.

Education groups say they would prefer lawmakers not pay back the shift right away. Scott Croonquist, with the Association of Metropolitan School Districts said districts would prefer that lawmakers direct more money to schools instead.

"Any available dollars they have, they need to direct to programs or funding streams that are going to provide new money to schools," Croonquist said. "The reality is that paying the shift back doesn't provide one penny to school districts. It's just paying them what they have coming sooner."

But increasing funding for schools will also increase the amount the state will eventually owe the schools. State finance officials say the shift would increase from $800 million to $1.2 billion if Dayton's increase in school funding is enacted.

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