District 197 Borrows More to Cover State Aid Shift

is over, and District 197 has a clearer picture of how the state’s new public education funding formula and other measures in the education spending bill will affect schools in the Mendota Heights-West St. Paul-Eagan School District.

The biggest change resulting from the new law is a shift in the state’s overall funding of K-12 public education. Minnesota previously used a "70/30" formula to fund schools–meaning schools received 70 percent of the money owed them by the state in the current budget year and 30 percent of it the following year. Under the new bill, that formula becomes 60/40.

The shift will delay $700 million in funding to K-12 schools until the next two-year budget cycle.

Susan Brott, communications director for District 197, said that the additional shift would mean an extra $3.5 million shortfall for the district. School officials had been counting on state education funding remaining flat, but hadn’t necessarily anticipated an additional 10 percent shift.

The district’s 2011-12 budget has already been approved.

To manage the cash flow problems created by the shift, the school board approved general obligation aid anticipation certificates of $14 million at their , up from the $12.7 million it borrowed last year.

Brian Schultz, assistant director of business services, said that a portion of the borrowing would be used to pay off last year’s certificates. And next year? “—All over again, until the state starts to pay back the shift,” said Schultz.

In order to make up for the cost of borrowing (interest) caused by the delayed aid, the new education bill adds an additional $50 to the per-pupil general education formula in each of the next two fiscal years. That’s approximately $250,000 for the district, which may largely be used to repay interest.

Integration Aid Eliminated

Integration aid in Minnesota schools was also eliminated as part of the new education spending bill. Aimed at encouraging racial integration, especially in and around more urban areas like Minneapolis, St. Paul and Duluth, District 197 schools previously received approximately $500,000 from integration aid annually. in the East Metro Integration District (EMID), which fosters integration between St. Paul and nine suburban school districts. 

While funding for integration will be phased out over the next two years, its loss represents a significant decline in revenue for District 197. Integration aid supports magnet schools and multicultural activities, while also helping to defray the cost of ongoing teacher training.

No DFL legislators, including Mendota Heights legislators, voted in favor of the education bill. It passed 71-57 in the House and 36-28 in the Senate.