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School aid delays will burden some districts; others will get breaks

Estimated delays.

State aid payments to school districts will be delayed this spring and paid back early June.

The Minnesota Management and Budget Department announced this week that it will borrow about $423 million in payments from 231 Minnesota school districts - including Nevis and Menahga - to be able to cover its own bills.

The amount borrowed depends on what districts have in reserves. Schools with the least amount will not see any delays. Districts with a fund balance of at least $700 per student will be affected.

The Park Rapids Area School District will not see a delay. Its fund balance as of June 30, 2009 is at $826,727.

The Nevis School District's delay will be around $515,000, while Menahga's is expected to be about $602,000.

Nevis superintendent Steve Rassier said the district may experience a cash flow problem at the end of May, when payroll is due. Three state aid payments will be delayed, March 15 and 30 and April 15. The district might negotiate a short-term line of credit, if needed.

Rassier said a recent meeting of superintendents on the subject drew some retired administrators who reminded the assemblage that schools faced a similar budgetary crunch in the early '80s.

"Our concern is next year," he said, when the state may borrow funds in September and possibly not reimburse until May or June.

"The good news is the money will be back by May 30," he said. The alternative is to cut, not simply delay, funds.

Menahga superintendent Mary Klamm said that the state does not want its credit rating hurt by borrowing.

"So instead of them borrowing, they're going to force schools to borrow."

Although she called the situation "unfair" because school board members have been fiscally responsible, times are different now.

"This is only the beginning of some very difficult times for districts," Klamm said.

Menahga School Board may have to resort to short-term borrowing in the next few months as a result of the state aid delay.

"This is the first time we've ever had to set up a line of credit," Klamm said.

Personnel cuts will not be a viable option, she added, because there is no room for them.

There's a silver lining though.

"With school districts, I think they will take this rather than a permanent cut," Klamm said.

Forum state capitol reporter Don Davis contributed to this report.