Minnesota Senate OKs $430M partial payback for schools, using reserve money

/ 26 March 2012 / jennifer

Megan Boldt, Pioneer Press, March 26, 2012 –

The Republican-led Senate approved a bill that would start paying back the $2.4 billion owed to Minnesota public schools, despite critics’ assertion that it is fiscally irresponsible to start spending down state budget reserves to do so.

It passed 35-29 along party lines on Monday, March 26.

The bill would repay schools about $430 million in delayed payments previously used to balance the budget. And it also sets aside about 1 percent of Minnesota’s general fund budget – about $150 million annually – to pay back schools.

“This is what any Minnesotan would do. If they had money in a savings accounts and they had a credit card bill, they would pay back as much as they could,” said Sen. Claire Robling, R-Jordan.

But Democrats argued the move put the state in a dangerous position by tapping reserves, giving Minnesota little cushion if the economy falters.

“It’s a political vote to get out of a bad decision from last year,” said Sen. Richard Cohen, DFL-St. Paul.

Republican legislative leaders and 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 schools to $2.7 billion.

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

The Senate’s plan doesn’t specify where the money would come from to pay back some of the shift. But the House Republican plan cuts the state’s reserves from $657 million to about $227 million. An additional $350 million in cash-flow accounts leaves the state with about $577 million on hand.

The Senate’s bill also includes a measure to freeze teachers’ raises for experience and continuing education if a contract expires while negotiations continue between a district and its union. Currently, when a contract expires, many teachers still get those salary increases called “steps and lanes” because they are already built into their contracts.

A similar bill to start paying back the shift already has passed the House. The House GOP plan, though, includes ending the practice of laying off teachers based on seniority rather than performance, a measure that already has passed the House and Senate.

Those differences need to be reconciled before a bill is sent to Dayton.

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