Sen. Katie Sieben voiced her support for legislation that would repeal a state law allowing the state to borrow money from school districts to meet state cash flow needs. A similar bill was introduced and passed in the state Senate last year, with Sen. Sieben’s support.
“This provision hurts our school districts,” Sen. Sieben said. “Last year, Democrats strongly supported the repeal, but Governor Pawlenty would not support removing the provision from state law.”
The provision allowing the state to borrow from school districts was passed in 1986 and was never used until last year. Last spring, the state borrowed $416 million from schools. The funds were paid back by the end of May. Then in September, another $192 million was withheld from schools.
The payment amount delayed is calculated based on the size of each district’s reserve fund and operating levy. Districts that have been fiscally prudent and built reserves and also those who have strong support from local property taxpayers, get nicked the most.
“The Hastings School District worked hard to get out of Statutory Operating Debt but was penalized by the Pawlenty Administration for their hard work. This has to end.”
Two bills to repeal the borrowing provision were heard in Education Committee on February 23 and Sen. Sieben supported those bills.
“Penalizing our schools for being good stewards of their property taxpayer’s money doesn’t provide quality education,” Sen. Sieben said. “Schools are not the state’s piggy bank.”