Minnesota House OKs plan to pay back schools part of $2.4 billion

/ 15 March 2012 / jennifer

Megan Boldt, Pioneer Press, March 15, 2012 –

The Minnesota House on Thursday, March 15, approved a plan that would start paying back the $2.4 billion owed to public schools by using the state’s budget reserve.

The legislation, which passed 74-59, would shift $430 million from rainy-day funds to repay K-12 schools. It also includes ending the practice of laying off teachers based on seniority rather than performance, a measure that already has passed the House and Senate.

“There’s a message today. This is what people have to know. Republicans have a plan. Republicans have a plan to reduce the debt we owe to schools,” Rep. Pat Garofalo, chair of the House Education Finance Committee, said Thursday.

“What did you hear from Democrats? Phoney-baloney excuses for not paying back the debt they took out on schools,” continued the Republican from Farmington.

Democrats argued that Republicans are raiding the state’s reserves to make a nominal attempt to pay back the shifts. They said closing corporate tax loopholes would be a way to pay schools faster. “You’re trying to shine up this 1973 Dodge Dart and make it look pretty,” said Rep. Joe Atkins, DFL-Inver Grove Heights.

It’s unclear whether the bill will have any traction in the Senate. Republican leaders there declined to say whether they support the idea, and no hearings have been scheduled.

Republican legislative leaders and Democratic Gov. Mark Dayton struck a budget deal last session that included delaying an additional $770 million in state aid for schools to help close the state’s budget shortfall. That brought the total amount owed to $2.7 billion.

That amount is now about $2.4 billion after state officials agreed to apply the $323 million surplus shown in the latest state budget forecast to the debt.

The House Republican plan to pay back schools would cut the state’s reserves from $657 million to about $227 million. There’s an additional $350 million in cash-flow accounts, leaving the state with about $577 million on hand.

Democrats argued that would only get the state through about 21 days of budgetary expenses.

They unsuccessfully tried to amend the bill to get rid of a tax preference that allows corporations to shelter earnings offshore. Democrats contend that it would bring in about $450 million a year and that schools could be paid back in about six years.

“Their interests are very clear: Protect the very rich. Protect corporate interests. And every kid in the state can go fend for themselves,” Rep. Ryan Winkler, DFL- Golden Valley, said of Republican votes.

Garofalo said it makes good sense to shift the money.

“When you have cash on hand, you pay back your debt,” he said.

Republicans and Democrats continued their finger-pointing on who is more responsible for the billions of dollars owed schools. In reality, both parties are to blame.

About $1.9 billion in accounting shifts were approved in 2010 when Democrats controlled the Legislature, Republican Gov. Tim Pawlenty was in office and neither side could agree on how to balance past budget shortfalls.

Those school shifts were reinstated and an additional $770 million tacked on yet again last session – this time with a DFL governor and a Republican-controlled Legislature – as lawmakers struggled to compromise.

Megan Boldt can be reached at 651-228-5495. Follow her at twitter.com/meganboldt.