MN Schools Short on Cash

Reported by: Shane Delaney

ALBERT LEA, MN - Minnesota public schools are back in session and already most of them are struggling for money.

Earlier this year state lawmakers agreed to borrow money from Minnesota schools to help resolve the state's government shutdown. When the state borrowed the $2.2 billion they never set an exact date on when to pay it back.

     

That means for this academic year schools will be short money, and districts with already declining enrollments are looking for funding elsewhere. 

“The state is taking out a short term loan on the backs of the school districts,” said Michael Funk, superintendent of Albert Lea Public Schools.

Funk says his district, along with about 90 percent of public districts in the state, are taking out loans to cover the shortage.

“It amounts to about $20,000 in interest we have to pay throughout the year but that's because we have a pretty good fund balance we can dip into when the state isn't paying us money,” said Funk.

Funk says the funding gap comes at a time when a record setting number of districts are asking voters for an increase in operation levees this November.

“That is a direct result I think of not having real solid balanced and not having enough money from the state and this shift just compounds things,” said Funk.

The shift is even hurting districts with increasing enrollment.

“We're looking at probably late spring maybe early summer where we'll run out of cash to pay our bills and we'll have to go out and then borrow,” said David Krenz, superintendent of Austin Public Schools.

Krenz says his district has already secured a line of credit with a local bank. He says while an increasing enrollment means more state money, it also means more expenses.

“In our case we're continuing to grow so that's a good thing and being a larger district those students can fit in a little easier than if you were in a smaller district,” said Krenz.

And even though districts will eventually get the money paid back to them, some administrators say enough is enough.

“Is the education of our kids important or is playing this game of financial gimmickry what we want to do, and I wish we had real leaders at the capitol who would step up and say enough is enough,” said Funk.

When the state does repay they'll give the districts an additional $50 per student to help cover interest charges and other costs.

     

Funk says that should be enough for the Albert Lea district , but many in the state will have to absorb those interest charges

Infographic: Minnesota's "School Shift"

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How do I cut thee? Let me count the ways that the Gang of Six would do it

Who Will Suffer Under the 'Gang of Six' Plan?

George Zornick

July 20, 2011

President Obama endorsed the Senate “Gang of Six” deficit reduction plan Tuesday, saying that the proposal “is broadly consistent with the approach that I’ve urged” and “makes sure that nobody is disproportionately hurt from us making progress on the debt and deficits.”

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Disaster Jamie Dimon MedicarePresident Senate Social Issuesco-director

However, an examination of the plan’s specifics reveals that corporations and wealthy Americans won’t feel much pain at all—in many cases, just the opposite. The plan slashes taxes, and could bring the top personal income rate down as low as 23 percent—meaning CEOs like Jamie Dimon and Lloyd Blankfein could see their after-tax income increase by as much as $3 million, according to Dean Baker, co-director of the Center for Economic and Policy Research. The corporate tax rate would bereduced from 35 percent to between 23 and 29 percent under the proposal. (Supposedly enough loopholes would be closed to keep total revenue from corporate taxes the same. Even in that scenario, corporations don’t pay an extra penny). Military spending also remains virtually untouched.

Meanwhile, the harm done to seniors, students, working families and others under the “Gang of Six” plan is unmistakable. Social Security benefits would be reduced, and there are also cuts to Medicare and Medicaid. Students and the disabled would lose some federal government support. Here’s a quick look at who would be most harmed under the new most popular proposal in Washington.

Seniors: Americans over age 65 get hit from several directions under the “Gang of Six” proposal. First, the plan reduces Social Security benefits by 0.3 percentage points per year by tinkering with the formula that adjusts benefits based on inflation. This could lead to annual reductions of over $1,300 for some seniors. Social Security is solvent through 2037 and does not contribute to the deficit, so this change is particularly misguided.

Medicare also would also face serious reductions. The plandirects the Senate Finance Committee to reduce doctor payments by $300 billion, and then cut another $200 billion from the program overall. To achieve that, anything from raising the eligibility age to increasing cost-sharing could be considered, and would almost have to be in order to find savings of that magnitude.

The poor: Medicaid will no doubt suffer under the “Gang of Six” plan, though it’s not possible to put a dollar amount on the cuts yet. The proposal says that the government must “spend healthcare dollars more efficiently in order to strengthen Medicare and Medicaid.” That’s obviously code for spending fewer dollars, which means Medicaid recipients can expect to receive less.

The cuts would be negotiated by another bipartisan group of senators over the next six months, but the starting point for Republicans on Medicaid is downright draconian. In the budget passed by House Republicans earlier this year, and supported by a vast majority of Republican Senators when it came up for a vote there, the program would be cut by a whopping 35 percent by 2021—even as medical costs skyrocket between now and then. It’s not likely the GOP would win that steep of a reduction, but even halfway to that point would be catastrophic for Medicaid recipients. As none other than Sen. Kent Conrad, a key figure in the “Gang of Six,” told the Huffington Post in June, Medicaid operates on such low overhead that a cut “goes right to medical services.”

The disabled: The “Gang of Six” plan completely eliminates a disability insurance program created under the 2009 healthcare reform bill. The Community Living Assistance Services and Supports Act, or CLASS Act, provides in-home care for anyone who becomes disabled, as an alternative to being placed in a nursing home. It provides up to $18,250 annually for these costs, with no lifetime cap. Premiums are $5 per month for students or people under the poverty line, and about $123 per month for everyone else, but it’s also voluntary—anybody can ask their employer to simply opt out.

The elimination of the CLASS Act is another example of sacrificing a valuable program that simply does not contribute to the deficit but rather conflicts with conservative ideology. The Congressional Budget Office estimatesthe program actually saves the government $70 billion through 2019, because people have to pay premiums for five years in order to qualify for benefits. It also keeps people out of nursing homes, which are a major driver of increasing medical costs.

Students: The “Gang of Six” blueprint directs the Senate Committee on Health, Education, Labor and Pensions, which oversees federal student loan programs, to come up with $70 billion in budgetary savings. Given the somewhat limited scope of what the Committee oversees, in terms of areas that actually create federal expenditures, it’s virtually impossible it could find savings of that scale without serious changes to federal student loans.

One idea popular with the Bowles-Simpson debt commission, and echoed recently by Representative Eric Cantor, would be to end the Stafford student loan program, which subsidizes the interest on loans while students are enrolled in college. An outright elimination of the program would save the government $40 billion over ten years, but would force students to pay interest on their college loans while still in school and likely not drawing much of an income, if any.

Pell Grants, which are federal scholarships for low-income students, are also likely to be on the chopping block. The program is already running an $11 billion deficit, and will no doubt be a juicy target for Senators looking to get $70 billion in cuts.

These are the areas currently identifiable based on the “Gang of Six” blueprint—but it calls for massive, yet-unspecified spending reductions, and possibly discretionary spending caps down the road. Given the current slant towards reductions for needy Americans in the blueprint, it’s hard to imagine future reductions will be any different. 

George Zornick

School foundations help to enrich classroom experience

School foundations help to enrich classroom experience, but critics say they're the wrong solution to funding problems


School foundations help to enrich classroom experience, but critics say they're the wrong solution to funding problems
http://www.twincities.com/ci_18497576
Foundations can create a system of winners and losers. Wealthier communities have the ability to bring in more money, while less well-to-do districts can be left behind.  "They simply don't have the means to generate those kinds of dollars," said Mike Anderson, executive director of the St. Paul Public Schools Foundation.  That's why he believes that it's the job of the taxpayers to fund the core functions of education, he said. Anderson's group provides a tutoring program that serves thousands of students across the city and gives grants to teachers to enhance curriculum and offer additional programs to students, like nature journaling or art camps.http://www.twincities.com/ci_18497576

Foundations can create a system of winners and losers. Wealthier communities have the ability to bring in more money, while less well-to-do districts can be left behind.  "They simply don't have the means to generate those kinds of dollars," said Mike Anderson, executive director of the St. Paul Public Schools Foundation.  That's why he believes that it's the job of the taxpayers to fund the core functions of education, he said. Anderson's group provides a tutoring program that serves thousands of students across the city and gives grants to teachers to enhance curriculum and offer additional programs to students, like nature journaling or art camps.