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Letter to the Editor: Delay may impact students down the road

WORTHINGTON -- The Daily Globe ran an article on Wednesday that is a great precursor to today's educational article regarding District 518 finances and the potential effect of the state's budget issues. The State of Minnesota will have a cash flow shortfall in March, April and May of 2010 that will require implementation of Minnesota Statute 127A.46. This statute requires modification to the state aid payment schedule for school districts to the maximum extent allowable before engaging in short-term borrowing. Since the amount needed to avoid state short-term borrowing is less than the maximum that could be delayed under the statute, the factors in the statutory formula have been adjusted accordingly.

So what does this mean for District 518 in respect to the March 15, March 30, and April 15 delay of payments, which is required to be repaid no later than May 30 when tax revenues are expected to be collected?

The State of Minnesota will delay our payments to the sum of $2,460,712, which is based on the audit numbers from June 30, 2009. This in effect should not create a short-term borrowing issue for District 518 this year because the district has been prudent in planning for fiscal operations until the end of the current operating referendum that reaches out to 2014-'15. But this is not the same for every district, and each district's fiscal obligations vary depending on a variety of situations (one example would be employee contracts).

As currently defined by the statute, aid payment delays only apply to school districts and do not apply to cooperatives, intermediate school districts or charter schools.

In all, 231 of Minnesota's 337 districts will be affected by the delayed payments. Of this number, many of them may need to consider short-term borrowing in order for them to meet financial obligations and hence, have increased costs that were not originally a part of their approved budget.

District 518 is fortunate to have developed a long-term fiscal plan that allows for no increased costs to the budget.

But as many of you know, the state's continued financial concerns continue with the $1.8 billion deficit this year and the long-term budget issues that are much higher. The concern that we have in District 518 is that next year the state may implement this legislation sooner in the school year (projection is September or October), and it will at that point have a budgetary or fiscal impact on District 518 in terms of cash flow borrowing.

To break this down in a manner of dollars, the impact for District 518 borrowing $3 million of cash flow will equal approximately one teacher position for the year. This is particularly frustrating, knowing that the district had planned to avoid any major reductions and only address those reductions that could be defined as efficiency- or enrollment-based.

As the upcoming legislative session begins and they begin to address many financial implications, the message has been sent that education will see potential reductions in some form (basic formula, categorical aid or fund specific) of $100 to $500 per pupil. This will further complicate the planning process for the 2010-'11 school year and beyond with no changes to legislation that may eliminate unfunded mandates or requirements that have strained educational systems for years.

Along with the item of the governor's shift of dollars in delayed payments, (District 518's delay is approximately $2.5 million), it seems as though this could potentially become a permanent state cut that could not be factored into the planning process that creates further fiscal implications for our district.

This article is not meant to present all the doom and gloom related to district finances, but to present the potential implications that the district may face shortly depending on the action of the legislature and the State of Minnesota.

Hopefully, the economy will begin to change soon in order to avoid educational reductions around the state that could have lasting effects on students' education.

I am thankful for all our outstanding educators and staff who have been committed to providing quality educational opportunities for students and the expectations of our community to support, promote and push for a quality system that gives all kids an opportunity to excel.

I would like to let you know that we appreciate you as educational supporters and hope that you will insist that the legislature continue to be fiscally responsible for students in our school districts.

John Landgaard is the superintendent for District 518.