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Schools again forced to loan money to state

School districts will once again act as the state's banker as more anticipated aid delays were signed into law when the legislature adjourned for the year.

Beginning July 1, school districts will see a 30 percent shift in state aid payments, meaning they will receive 70 percent of their aid this fiscal year and the remaining in 2011-12. That's another $600,000 the Detroit Lakes School District will lose, and on top of previous cuts, the total comes to about $6 million, Superintendent Doug Froke said.

Other payments will more than likely be withheld this fall when the state runs into more cash flow problems, according to local and state education officials.

Detroit Lakes school officials met with Minnesota Department of Education, Minnesota Rural Education Association and Minnesota Association of School Administrators representatives Tuesday, and discussed how the state will turn to school districts to balance its books this fall.

"The possibility of the state looking at school districts in meeting their cash flow needs is very real," Froke said.

The same statute the state used this March, April and May to withhold monthly payments and pay them back at the end of May, may be used again as early as this August, he added. But this time, it could take more than three months before school districts see that money back.

Waubun-Ogema-White Earth Superintendent Mitch Anderson said it's possible the state will pay districts back in the fall when taxes are due. But it's also possible it will borrow money again in the winter or spring and not pay it back until May of next year.

"So it could come in two different bouts next year, where this year was only in the spring," he said.

Which makes it difficult for the district to set up a line of credit that has to be paid back within 90 days.

Although they anticipated the shifts and delays, school officials say it's frustrating to operate through the year with limited funds.

Anderson said even though the district is only receiving 70 percent state aid during the year, it's documented as 100 percent.

"And that's kind of their trick is that with our audits and everything, it's gonna show up that we received (that additional) 30 percent, but we haven't," Anderson said.

While the state turns to school districts to solve its cash flow problems, schools will have to turn to lenders to pay their own bills.

"We're going to make a lot of real quick decisions without having a lot of time to do it," Anderson said.