Districts begin preparing for cash-flow shortfalls

By Tanner Kent

MANKATO — In recent weeks, Waseca has become a bellwether among Minnesota school districts.

In the latest release of MCA-II test data for reading and math, Waseca’s scores — from top to bottom — were among the highest in the state. The district boasts one of the region’s most refined staff development programs — including one of the area’s first programs for Professional Learning Communities — and it has embraced the call for higher standards by developing course offerings and revising curriculum in the core disciplines.

But Waseca is also the leader in another school trend that portends much more dire consequences: short-term borrowing.

Normally, a school board passing a resolution to borrow more than $3 million to cover cash-flow would be a newsworthy event.

But when Waseca’s School Board did just that during Thursday’s meeting, it was only one of many that represent the first wave of school districts seeking cash-flow relief in the wake of Gov. Tim Pawlenty’s decision to substitute delayed aid payments instead of outright reductions in order to balance the state’s $4.6 billion deficit.

And while school officials agree that Pawlenty’s plan to delay 27 percent of the state’s aid is better than a funding decrease, that doesn’t make the fallout any easier to digest.

“We expected we’d have to do this,” said Waseca Supt. John Rokke of the board’s resolution to approve short-term borrowing of up to $3.3 million. “And now, the state’s budget forecast (for next year) is getting even more dismal. These are just very trying times.”

All told, Pawlenty’s delayed aid payments will amount to a shift of more than $1 billion over the next two years. But the cost to school districts is even greater because of interest payments, which vary by school district but generally amount to about $50,000 for every $1.5 million borrowed.

For Waseca, the consequences of such an aid shift will become apparent this fall when the district attempts an operating referendum to cover the shortfall.

Rokke and members of the school board have already been active in seeking community feedback on the length and amount of the referendum, going so far as to host an information booth at the recent Waseca County Fair. The district has reduced its budget by more than $2 million during the past three years and failed a referendum last year.

Rokke said the board will come to a final decision on referendum details during its Aug. 20 meeting. Proposing a plan that financially struggling taxpayers can support, he said, will be a bigger challenge this year than ever.

“I understand that when there are bills to pay and food to put on the table, it’s really difficult,” Rokke said. “All we can ask is that people make an educated decision.”

In St. James, the board has already approved a plan to borrow up to $1.3 million; in Lake Crystal Wellcome Memorial, it’s nearly $2.1 million. Some school districts in the metro area, including Anoka-Hennepin, Hopkins, Edina and Roseville, will have to borrow between $5 million and $15 million.

In New Ulm, which has reduced its budget by millions in the face of declining enrollment the past few years, the school board approved a proposal on Thursday to borrow up to $3.9 million. Supt. Harold Remme said district officials have been discussing the plan for weeks and they’re worried this isn’t a one-time problem.

“I’ve been (in education) long enough to know that these trends recycle for two or three years before we get out of it,” he said. “The chances of this repeating next year are pretty good.”