State Surplus Could Save Hopkins Schools $190K

The state surplus announced Wednesday will likely save about $190,000 in borrowing costs, John Toop—the district’s director of business services—told School Board directors Thursday.

The surplus resulted in about $318 million that, by law, must go to repay so-called “funding shifts.” That’s just a fraction of the $2.4 billion in deferred payments the state owes to schools, but it’s enough that Hopkins will probably be able to go another year without having to resort to costly short-term borrowing.

Minnesota historically paid schools 90 percent of their state money in one fiscal year and the remaining 10 percent in the next. State lawmakers and former Gov. Tim Pawlenty previously changed that to a 70-30 split to balance the state’s budget—effectively borrowing from schools. During the 2011 special session, Gov. Mark Dayton and Republican legislators dropped it further to a 60-40 split.

These shifts have forced some districts to borrow money until the second payment comes through. Although Hopkins hasn’t yet had to do this, district planners expected the district would have to borrow this year.

But the surplus—which gives Hopkins 64.3 percent of the money in the first payment—appears to change that projection

Because the district has a healthy fund balance, the extra 4.3 percent should be enough to avoid previously anticipated borrowing—saving $25,000 budgeted for the 2011-12 school year and $165,000 for 2012-13.

“It is probably cementing the lack of having to borrow for cash flow purposes for this district,” Toop said.

Not all districts are so fortunate, though. Many will still have to borrow even with the increase.

Hopkins Sen. Ron Latz (DFL-District 44) said he doesn’t think the surplus will take away any political pressure to continue helping schools.

“They’ve been hit so hard,” he said. “You throw a couple grains of sand at them? So what. You swiped a couple buckets (before).”

Still, Latz said the surplus is a bit of good news: “It’s better than the alternative. We’re moving in the right direction.”