State Aid Shift Comes at $20M Cost to District 196

The Rosemount-Apple Valley-Eagan school district will have to borrow money because a state aid shift included in the budget for the new biennium will cost it about $20 million this year.

School leaders and board members met Monday to talk about district goals and its financial future. Jeff Solomon, District 196 director of finance and operations, said the schools will need to borrow cash to make up for the $18 million to $20 million shortfall caused by the Legislature's decision last week to further delay state aid payments to schools.

"The state is a very scary funding partner," Superintendent Jane Berenz said Monday.

The new state budget gives school districts 60 percent of state aid one year, and then gives the other 40 percent after final enrollment is calculated. Before this the ratio had been 70/30; historically it started as 90/10. While this helps the state balance its budget, it has left many school districts scrambling.

"It's like stealing money out of your kid's piggy bank," school board chairwoman Jackie Magnuson said.

Between a state aid shift and property tax shift, the district no longer has a fund balance that covers such costs, Solomon said. It had already elected to to cover about 50 days this summer that were projected to be in the red, and took out a line of credit, which stands at about $24 million if needed.

The district will have to make a decision about further borrowing—which likely will be done through tax anticipation certificates, or securities that anticipate the taxes that will be collected later—by January or February, Solomon said.

“It unfortunately puts more variables into our normal decisions we make,” Jeff Solomon, director of finance and operations for the public school district, said of the state budget. “We’ll just have to navigate through it.”

The school board on Monday also discussed the possibility of including a levy referendum in November. The board has an Aug. 25 deadline to make a decision on whether to ask voters to pass a levy this fall.

Last fall's District 196 levy referendum failed; had a majority of voters been in favor, it would have brought an additional $15 million to the district over the next 10 years.

Among other discussion topics, the board also looked at district-wide goals. They plan to get staff and community members involved in talking about budget decisions. This will include school meetings and focus groups, according to a document outlining district goals.