"State Hits Up Schools for Loans"

That was the headline in today's Twin Cities + West edition of the Star Tribune. News regarding education mostly revolves around school funding issues and the state’s unprecedented budgetary problems. We would rather see news regarding student achievement and the great work our students and staff are doing. The reality of the unprecedented financial situation that the state and our schools face cannot be ignored, however.

The latest news involves state aid payment delays that are required when the state runs into cash flow problems. By law, “The state must first delay state aid payments to the maximum extent allowable before engaging in state short term borrowing,” according to a memo received on January 26 from Alice Seagren, Commissioner of Education.

According to the memo received from the Commissioner, state aid payments will be delayed on March 15, March 30 and April 15. The estimated total payment delay for all the schools in the state is $423.3 million. The delayed payments are required to be paid back to schools in full on May 30, 2010. This situation will require many Minnesota school districts to enter into short-term borrowing to cash flow their districts during this time. For Delano Schools the delay is estimated to amount to $1,960,407 for the March 15, 30 and April 15 payments. The school district will be able to cash flow itself during this period with the reserves that it has on hand.

This aid payment delay should not be confused with the payment shift that was put in place where the state delays 27% of the aid due in the current fiscal year to the next fiscal year. The shift causes another cash flow concern to school districts. Delano School District should be able to cash flow both the delay and the shift this time around.

School districts are sometimes criticized for carrying healthy fund balances. If there was ever a time when fund balances are needed for cash flow purposes, it is now. The other advantage is that the fund balance gives us time to respond to these unprecedented actions without immediate harm to the educational program or incurring the expense of short-term borrowing.

I look forward to the days when more of the headlines in the news are about all the positive things that are going on in our schools.