Minnesota Republicans covered massive budget shortfalls last spring by an accounting trick. They decided not to give schools the money they promised them. Of course, after all our schools had budgeted based upon the amounts they’d been promised. Republicans call this bit of Enron accounting a “shift.”
The brilliant minds amongst the Republican legislative leadership have come up with a solution to the crisis they’ve caused our education system: pay back schools out of the state’s reserve fund.
Republicans in the Minnesota House are proposing to tap two thirds of the state’s budget reserve to pay back a portion of a K12 school shift they used to balance the budget in 2011.
Rep. Pat Garofalo, R-Farmington, says the measure is part of a K12 bill that will be heard in committee tomorrow. He said paying back schools with $430 million from the state’s budget reserve is a better use of the money.
“If you look at accounting principles, it’s better to reduce your debt and reduce your liabilities than to have that cash sitting around,” Garofalo said.
What’s that you ask? Isn’t the reserve meant for rainy day or don’t we have to repay the the reserve fund or when are we going to repay the entire IOU?
Quit being so negative. Never you mind. Nothing to see here.
Republicans never fix problems they cause … they just kick the can down the road. Aren’t y’all used to it, yet? Don’t you all remember Gov. Tim Pawlenty papering over his massive holes in his budgets with accounting tricks and various gimmicks?
What bad things happened other than a bridge fell down and Minnesota now has a structural deficit that will only cause our deficits to expand indefinitely?
Twenty-six districts, in the Association of Metropolitan School Districts, (AMSD) will have to borrow to cover cash flow shortages due to the Republican budget shift. Only fifteen districts had to cash flow borrow last year. This jump in borrowing is significant.
Districts, like Saint Paul, have already spent five hundred thousand dollars in bank financing. None of this borrowing is going to books, teachers, or supplies. It’s going to help them cover regular operating expenses. Typically schools allocated budgets are paid in ninety percent up front sums and ten percent at the end of the year to account for enrollment fluctuations. To pay for our current state budget, Republicans decided only give schools sixty percent. Schools make up for that shift by borrowing. That’s expensive.
The forty-two member AMSD schools already reduced operating fund balance reserves by $59 million last year. This year they had to trim an additional $61 million. These metro districts alone have had to cut 600 employees. Statewide the numbers are even more staggering. Millions of our kids money down the rat hole so Republicans didn’t have to raise taxes 2% on millionaires.
“None of this was necessary. Gov. Dayton put a budget solution on the table that protected our schools by asking the very richest Minnesotans to finally pay their fair share of taxes. Unfortunately, Republicans chose to protect millionaires while borrowing billions of dollars from our children’s futures.” State Senator Chuck Wiger via Parents United
See the financing costs per district after the break.
Full size PDF of Charts
Rep. Pat Garofalo (R-Farmington) has been campaigning to prevent school districts from winning their school levy campaigns. One-third of all Minnesota school districts have levies on the ballot to pay for operating expenses because Garofalo and the Republicans in the legislature balance the state’s budget on our schools backs.
The MN GOP used the accounting trick of shifting payments to schools. This “shift” basically means that MN isn’t going to pay schools the money it promised. Yet, Republicans are lying that they inreased per education spending and that its the schools not spending their money wisely.
Garofalo’s campaign isn’t going over well even amongst Republicans. Sen. Sondra Erickson (R-Princeton), infamous for her “Gestapo Tactics“ quip, doesn’t like it and she’s Chair of the Education Committee in the House:
State Rep. Sondra Erickson, R-Princeton, said she typically votes in favor of local school referendums. But Erickson, chairwoman of chair of the House Education Reform Committee said she won’t tell anyone else what to do.
“I don’t involve myself in local issues when it comes to the property taxes of my constituents,” Erickson. “What I say to them is I can probably afford an increase in taxes, or continue to maintain this levy, but you have to decide because that’s your money, not mine.”
Sen. Carla Nelson (R-Rochester) is also pushing the same lies that Rep. Pat Garofalo (R-Farmington) is. She is conveniently forgetting that the MN GOP used a budget shift to make it appear that they balanced our state’s budget and increased funding for our schools. The accounting trick was to not pay our school districts the money they promised them.
Republicans are trying to undermine the school districts that have levies on the 2011 ballot. One-third of the state’s school districts have levies asking for voters to increase their property taxes to pay for basic expenses which the MN GOP refuses to fund.
Nelson wrote an op-ed on September 9, 2011. In it she referenced specific numbers for her school district. Several superintendents for local school districts wrote an op-ed in today’s Rochester Post Bulletin pointing out her lie of omission:
… we are now seeing some legislators come forward with a misinterpretation of a spreadsheet from the Minnesota Dept. of Education (MDE) that is misleading our public. In some cases, the purpose has been to oppose districts’ efforts to renew or increase an Operating Levy referendum this fall. (To be clear, Sen. Nelson did not express such opposition in her article and has stated that she does not believe it is her place to publicly raise such opposition.)
The problem with the numbers provided in Sen. Nelson’s article is that the document from which her information is taken is intended to indicate an individual district’s maximum potential revenue in various educational programs, rather than the actual revenues to schools. This fact has been verified by the MDE financial staff but has not been recognized by those who have publicized the numbers. Additionally, in some cases more than half of the touted increased revenues to schools come with required increased spending. In other words, if an individual school wants a good portion of the money being offered, they would need to increase spending in state-specific categories to get it. As such, schools have no flexibility in using these dollars to pay the operating expenses of the school district.
And note how the Republicans are limiting the ability of school districts to control their own spending? What happened to the local control?
Many school districts in this state are in trouble. A third of all districts are asking voters for a levy for basic operating expenses. They are in trouble because the Republicans at the state legislature balanced their budget at their expense.
But if you ask a Republican, they’ll say otherwise:
State Rep. Pat Garofalo, R-Farmington, chairman of the House Education Finance Committee, said he doesn’t like what he’s been hearing lately about school district finances. The latest tally from the Minnesota School Boards Association shows about one in three districts are planning to ask voters in November to provide additional operating revenue through local property taxes.
Garofalo is reminding those districts that they just received a significant increase in funding from the state, including a $50 boost in the per-pupil formula.
“When you’re making these additional expenditures at the statewide level, the property tax is not to be used to go back for a second bite of the apple,” he said.
Garofalo said he plans to be very vocal about the districts he believes are “abusing the process” when it comes to levy votes.
The truth is that Garofalo is lying.
The MN GOP used a budget shift to make it appear that they balanced our state’s budget. The accounting trick was to not pay our school districts the money they promised them. Hence the levies for operating expenses.
And that $50 per pupil increase, that’s something Gov. Dayton forced the Republicans to accept. It would be even worse if it wasn’t for Dayton.