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Schools get increased state aid payment

Public and charter schools across Minnesota saw an 18 percent increase in their expected state aid payments this December, it was announced last week.

The state was able to increase the payments as "a result of an improvement in the state's budget outlook" for 2012-2013, according to a memo to school superintendents from Tom Melcher, director of school finance for the Minnesota Department of Education.

Melcher added that state aid would be reviewed again in February, and if there's further improvement in the state's budget outlook, the current state aid payment percentage could be increased again in March.

The increase is good news for cash-strapped school districts across the state, many of which have been borrowing funds to cover for insufficient aid payments.

The state shifted the way it distributed its aid to schools in 2009, paying out just 64 percent of a school's total funding one year, and withholding the remaining 36 percent until the following year. Before 2009, that ratio was 90 percent the first year and 10 percent the next. The shift caused many schools to borrow against their anticipated aid in order to keep their cash balances at required levels during the 'gap' in payments.

One of those districts was NY Mills, which has been borrowing against its anticipated aid every year since 2009. Thanks to the state aid increase this month, NY Mills Superintendent Todd Cameron said the school would probably not have to borrow again next year.

The Perham-Dent School District decided earlier this year not to borrow against aid anticipation, and instead decided to closely monitor its cash flow.

The payout ratio has increased to 82.5 percent the first year, and 17.5 the next, the Department of Education stated in a press release. That's still not at pre-2009 levels, but it's an increase from last year's 64-36 ratio.

Because of the increase, Perham-Dent received $850,000 more than expected with its Dec. 15 state aid payment.

New York Mills received an estimated $425,000 more than anticipated.

Perham-Dent's Business Manager, Kristi Werner, said in an interview that the increase means more funds in the district's cash flow, though it does not change the general fund balance.

She said it means, "we made the right decision in not borrowing."