Saturday, September 25, 2010

Oh, Don't Worry. K-12 Can Pay For It.

In the debate over America's ever increasing deficit, the argument is often made that it is unfair to burden our children with debt. I think that's a fair statement. Yet isn't that exactly what we are doing in Minnesota every time we plug our budget hole with money that was originally intended to fund our K-12 schools?

This morning I saw a Star Tribune article announcing that the state will once again be borrowing funds from the schools. They will be borrowing $142M from some districts. That is scheduled to be paid back without interest in May. Desperate times call for desperate measures. The state's finances are in dire straights. Many would say that everyone has to take some cuts to help get us back on track. That may very well be true. But has K-12 become our go to source when we don't know what else to do? I wouldn't be as concerned with all the short term borrowing if it was the first time the state has turned to this course of action this year, if it didn't come on top of last year's funding shift, and if it weren't for the fact that K-12 funding has been frozen for two years and is likely to be frozen for another two. Since certain operating costs cannot be frozen, that essentially amounts to a decrease in funding in and of itself.

The numbers the Strib article provides should concern us. Here are a few that caught my eye:
  • Schools have seen $1.9 Billion in funding shifts
  • Chair of the House K-12 Finance committee, Rep. Mindy Geiling (DFL-Roseville) reports that this may be costing schools statewide $20 Million in borrowing interest costs.
  • The Association of Metropolitan School Districts reports that due to the shifts 33 of their member districts have incurred $5 Million in borrowing interest or lost revenue interest with Anoka-Hennepin making interest payments of $400,000 this year alone.
  • This round of short term borrowing took $9.6 Million from Hastings and the interest costs to the district will likely be $400,000 or $500,000 in the coming year.
By my own calculation, this latest round of short term borrowing will affect 40% of the state's school districts. And although it is not an ideal situation, a single round of short term borrowing, shifting funds, or freezing funding probably wouldn't hit schools as hard as the combination of all those likely will.

This is further complicated by the fact that there is no way to know when this money will actually be paid back to the districts. In the above mentioned article, Education Commissioner Alice Seagren herself is quoted as saying "I don't think anybody can anticipate or predict when it gets paid back." How do you put together a budget without knowing how much funding you will get and when it will actually be arriving?

Some would say that in that case you just need to make some cuts. There may be some cuts that can be made, but that neglects the reality that schools are already facing a number of unfunded or underfunded mandates, they are already shifting more and more supply costs to the students' fall school supply lists, they are already laying off staff, they are cutting certain programs, etc.

When the money is paid back, Rep. Greiling reports that it will be counted as new money. So in essence, the claim could be made at that time that the schools are receiving a funding increase even though it is simply a payment on previous lending.

This issue has really been on my mind lately with all the buzz that has been surrounding the newly released documentary "Waiting for Superman." (I haven't seen it yet, so I can't comment on it specifically.) Education issues are being pushed back into the forefront of society. Public schools are being labeled as failures and more people are jumping into the fray claiming that they know the solution. It's a complex issue and I don't think it has an easy answer. Given the diversity of the districts across the state, I don't think there is a one size fits all solution. But if we truly believe that education is the most important investment we can make in our children, isn't time we stop the financial gimmicks and actually get serious about investing in education?

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