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Willmar may have to wait for its regular aid payment from the state

WILLMAR -- Minnesota school districts could face another financial blow from the state this spring, when some regular aid payments could be held back for two or three months.

For the Willmar School District, up to $3.5 million in state aid payments in March and April could be delayed. State law requires that the payments be made by June 20.

The Willmar School Board heard a report on the possible delay Monday from Pam Harrington, director of business and finance.

Harrington said school districts were notified of the issue earlier on Monday.

Delaying school aid payments is one alternative the state has to improve its cash flow position this spring, Harrington said. Another possibility -- the state could do some short-term borrowing to deal with its cash flow problems.

A statute in place since the 1980s spells out how much school aid could be delayed and when it must be paid.

School districts with small reserve accounts or with deficits would receive their payments on time, but 296 of the state's 341 school districts could see delays, she said.

If the state decides to withhold the maximum allowed, Willmar would have to wait for $3.5 million. Harrington said she didn't know when a final decision would be made or how much the state could decide to delay.

If the full amount is delayed, Willmar could need to borrow and pay interest on as much as $2.9 million to maintain its own cash flow until June, she said.

The state is already withholding 27 percent of this year's school state aid until the next fiscal year, a result of Gov. Tim Pawlenty's budget cuts through unallotment last year. Pawlenty has said schools will receive the money next year, but that promise is not in state law.

The unallotment and other budget problems have grown from the state's $1.2 billion projected budget deficit this year and larger deficits expected in the next two years.

A number of school districts already borrowed money after Pawlenty's unallotment to maintain their cash flow. Willmar did not borrow last fall but may need to in the spring.

The board also approved an application to participate in the new federal education program called Race to the Top.

Superintendent Jerry Kjergaard said only some states will receive money for the program, and he doesn't expect Minnesota to be one of them. However, school districts must say by Wednesday whether they want to participate, and they won't be able to sign on in the future, so he recommended the board approve the application.

The program targets states with struggling school systems. Since Minnesota ranks near the top in many measurements, it may not get any funding, Kjergaard said.

If there is money available to Minnesota, it could be the only additional funding school districts receive for several years, he said. Because of the state's financial problems, school districts do not expect to receive state aid increases for some time.

"Just so you know, we're already doing a lot of the things they say we'll need to do in Race to the Top," Kjergaard said.

In other business:

- The board passed a resolution to discipline a teacher. The resolution did not name the teacher and listed only that there had been "allegations of misconduct." Human Relations Director Bill Busta said the teacher is currently on leave. The teacher will receive a letter and will have an opportunity to seek a School Board hearing or ask for arbitration. Information about the allegations will not become public until the process is over, he said.

- Board Chairman Brad Schmidt was re-elected to a second year as chairman in the annual reorganizational meeting. Dion Warne was re-elected vice chairman. Mike Carlson was named clerk, and Wayne Lenzmeier was named treasurer.

- Kjergaard told the board that the administrative team is preparing a list of proposed budget cuts totaling $2 million to be discussed at the Jan. 25 board meeting. "This is going to be a hurtful experience within the district," he said. "It will make last year (when the board cut $2.8 million) look like fun."

Linda Vanderwerf

I cover education issues for the West Central Tribune and have worked for the paper since 1995. I have worked in journalism since 1981.

Follow me on Twitter: @lindavanderwerf

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