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Area school districts plan for state aid delays

The Bemidji School District dodged a bullet in delayed state aid this time, but other schools aren't as lucky.

The Minnesota Management and Budget Department told schools Tuesday that the state will delay payments to them this spring because of a cash shortage.

The delay will apply only to school districts with an operating fund balance as of June 30, 2009, exceeding $700 times the number of its students.

Bemidji and Walker-Hackensack-Akeley School Districts were among a handful of districts with small budget reserves that won't be affected by the delay in state aid.

Fosston, Blackduck, Kelliher, Red Lake, Cass Lake-Bena, Bagley, Nevis and Mahnomen public school districts made the long list of public schools in Minnesota to receive little or no state aid in March, April and May. Charter schools are not affected.

Education Commissioner Alice Seagren issued a statement on Tuesday that said payments will be made in full to all districts by May 30.

Red Lake School District, which expects a total delay of roughly $1.56 million, looked closely at its cash flow and put in place a plan for the state aid delay.

"We're going to be close. If anything, it will be tight towards the end of May," said Willie Larson, Red Lake School District's business manager.

Schools were "unofficially" told several weeks ahead of time of the possible delay in state aid. School leaders are relying on the state's word to pay back the full delayed amount.

"There's always that concern of payback," Larson said. "We're going to take the state at their word. We have a contingency plan in place."

Many school districts are already forced to borrow money, and pay interest, because of the state aid shifts ordered through unallotment by Gov. Tim Pawlenty.

"They're going to borrow money at interest-free rates from districts that will cost us money," Larson said. "I have money that we have currently as certificates of deposits that I will have to cash early. There are penalties fees and a lost interest associated with that. The state is basically passing on the expense."

Kelliher School District will have a total of $270,580 delayed in state aid this spring.

While an absence of state aid can mean some schools taking out short-term loans to cover costs, some school leaders are also worried about the delay becoming a trend in the future.

"As far as immediate future, we will survive this, but who knows what the next few years will bring," said Kelliher School District's Business Manager Laura Nelson. "I've been down this road before. The state does what it needs to do. But it will cost us because we lose interest earnings on that money in the bank. Every dollar counts."

Cass Lake School District, which has a healthy fund balance reserve, will have roughly a $1.2 million delay in state aid and is considering borrowing money.

Business Manager George Wells said he is more concerned about the state not being able to full delayed amount on May 30 and having it pushed back into June.