Budget chair talks school funding in Owatonna

/ 23 July 2012 / eunice

Derek Sullivan, Owatonna People’s Press, July 23, 2012 – OWATONNA — The head of the Minnesota House Committee on Education Finance doesn’t like how public school districts are funded and plans to do something about it.

Rep. Pat Garofalo (R-Farmington) was at Torey’s last Thursday campaigning for House 24A candidate John Petersburg (R-Waseca). Garofalo, a four-term state representative and the leader of the Education Finance Committee, wants to revise the way public schools are funded.

Garofalo said that public schools receive roughly 64 percent of the money owed to them during the school year. The remaining 36 percent comes at the beginning of the following school year. Instead of 64-36, Garofalo said he would like the number to be 95-5.

“We have to pay that money back,” Garofalo said. “The state of Minnesota has $1 billion of the schools’ money sitting in a back account right now. Last session, we tried to pay that back. That didn’t happen. The governor vetoed that bill. (I) think that it’s important that when the state has cash on hand, the first thing you should do is pay off your debt.”

The bill that Gov. Mark Dayton vetoed was last April’s K-12 House Education Omnibus Bill, which, if approved, would have sent $430 million from the state’s reserve fund to schools. The money would have paid a fraction of the $2.4 billion owned to Minnesota public schools.

In a letter sent to Senate and House leaders, including Garofalo, Gov. Dayton wrote, “Admittedly, this notion has superficial appeal. … However, this action would perpetuate the terrible legislative practice of the past decade: trying to solve an immediate financial problem by substituting a larger problem, which will not be visible until later.”

However, even if bill passed, the amount of funding schools receive initially wouldn’t have been 95 percent. Also, schools wouldn’t receive any more funding, a fact pointed out by Tom Sager, director of finance and operations for the Owatonna school district.

“Changing that ratio improves the timing of said payments, but it does not increase the total amount of revenue on the funding formula,” Sager said.

Receiving payments earlier could end the recent trend of school district’s borrowing money while they wait for the back payment. The Owatonna school district expected about $35 million in state aid for the 2011-2012 school year. Because the state withholds a portion of the funds, Owatonna received only $21 million initially. Last November, the Owatonna school board approved the district’s plan to borrow up to $8.1 million in tax and aid anticipation certificates to make sure bills were paid on time. By acquiring the tax and aid anticipation certificates, the district had to pay $50,300 in interest and fees.

Last March, local state representatives Kory Kath (DFL-Owatonna) and Patti Fritz (DFL-Faribault) voted against the K-12 Education Omnibus Bill. Like Dayton, Fritz said it doesn’t make fiscal sense to raid the state’s reserve funds.

“It left a small amount in the checkbook,” Fritz said. “There are other agencies that may need help, too. We need the reserve fund. We need to look at (education funding), but that bill wasn’t the right way to go about it. It was a piecemeal attempt, at best.”

Fritz added that the Republican leadership knew the bill would be vetoed before it was brought to the floor.

If he wins a fifth term this November, Garofalo said on the first day of the next session, he would again look at how schools are funded. Fritz, who is running this November against Dan Kaiser (R-Medford), said if she returns next January, she would welcome the discussion and would happily support a plan, if it’s fiscally sound.

“I would absolutely love to take a look at how we fund schools,” she said. “It’s definitely a priority. It’s our future we are talking about.

“A lot of rural schools are struggling. Many of them have had to consolidate. In Blooming Prairie, Barry Olson is both superintendent and principal. The longer I’m (in the House), the more I realize that the piece of the pie my district receives just isn’t big enough. I’m just stating the facts.”

Garofalo said there was strong bi-partisan support for the K-12 Education Omnibus Bill last spring, and he’s hopeful the votes will be there once again in 2013.

“There are a lot of moving parts right now. A lot could happen,” Garofalo said. “The good news is that there is widespread recognition that the state of Minnesota literally has money sitting in a folder that says ‘School Districts’ Money.’

“The money is better used at the local level. It’s better to give the money to the Owatonna school district than to leave it in the state’s bank.”