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Perham-Dent School District not happy with legislative solution to deficit

The financial impact of the government proposal to delay funding to schools was a topic of concern during a Perham-Dent School Board work session Monday evening.

The plan, which delays $700 million of state payments to schools, when added to an earlier delay means schools will get 40 percent of their state money late. It also borrows against $700 million of payments due after the state won a tobacco lawsuit.

The state must repay both of those items, meaning $1.4 billion being spent in the current two-year budget (that tops $35 billion) will come out of Minnesotans' pockets in future years.

The delay in funding is nothing new for the district, as it already receives its funding in a 70/30 fashion, meaning 70 percent of funds are distributed in one year, while the other 30 percent are accounted for in the second year. The two-year state budget on the table would shift that even more, to a 60/40 formula.

That leaves the district in a position where borrowing that 40 percent in delayed funding is necessary - a move that costs the district in interest.

The district borrowed $3.5 million for the 2009-2010 school year to make up for the gap. The interest cost associated with that put the school back $30,000, according to Business Manager Kristi Werner.

While schools around the state are expected to see an increase in per-student funding with the budget currently on the table, Werner said it might not help the district, as costs associated with interest will eat up those extra funds. At this point, Werner said it's not clear just how much the district will have to borrow, but will be comparable to last year's situation.

-Forum Communications Reporter Don Davis contributed to this report