The old adage of borrowing from Peter to pay Paul is particularly appropriate right now in light of the state Office of Management and Budget’s decision to once again borrow money from Minnesota’s school districts to deal with Minnesota’s cash flow woes.


The old adage of borrowing from Peter to pay Paul is particularly appropriate right now in light of the state Office of Management and Budget’s decision to once again borrow money from Minnesota’s school districts to deal with Minnesota’s cash flow woes.

According to a press release issued last week by state Sen. LeRoy Stumpf, chair of the Senate’s Education E-12 Finance and Policy Division, this is the second time in six months that the MMB has had to dip into school district reserves so the state can meet its financial obligations. The state borrowed close to $423 million last winter from schools to deal with a cash flow crisis. Because state law required the state to borrow the money at the time, state officials had a convenient alibi for raiding someone else’s cookie jar.

Were the situation not so alarming, we might appreciate the irony of the state turning to school districts, many of whom are scraping by themselves financially, for short-term loans. Also ironic is the fact that some districts may have to borrow money now to meet their obligations and pay interest on that money that they can ill afford.

Independent School District No. 129 was preparing to borrow this summer to pay the interest on money it would have “loaned” to the state via delayed state aid payments. That was money that could have been put to far better use maintaining staff and programs. That did not happen.

Fortunately for many districts the Legislature passed a law during the past session that changed the school budget reserve amounts needed to allow the state to borrow from them. School districts now must have reserves equal to at least $700 per student before the state can borrow. Had the bill not passed, the state could have borrowed from districts with as little as $350 per student in reserve.

Forcing school districts to drain their cash reserves to cover the state’s cash flow problems punishes fiscally responsible districts. Many districts, Montevideo included, have made drastic cuts to their budgets to maintain adequate reserves.

Far from rewarding fiscally responsible school districts, the state is punishing them for being good stewards of local taxpayer dollars.

For the state to be able to dip into those reserves is not only unconscionable, it is bad public policy.

The state must honor the commitment it made in 2004 when it took over funding education to ease the burden on local taxpayers. That hasn’t happened.

Providing quality education to Minnesota’s schoolchildren is an obligation the state can ill afford to shortchange.