We'll gladly pay you Tuesday
Anyone who has watched a "Popeye" cartoon is familiar with the character "Wimpy." He is the unassuming gentleman who always seems to be hungry for a hamburger, but never has any cash. His standard line is "I'll gladly pay you Tuesday for a hamburger today." This is the same motto that state legislators of both parties have been using in the debate over school aid payments for the last 30 years.
When the legislature has had difficulty balancing the state budget they have made the choice to delay a percentage of planned payments to school districts. The aid payments to K-12 schools are still made on a timely basis except a portion of the budgeted funds are delayed. The school may receive smaller aid payments than they had planned at the beginning of the year, but they receive larger aid payments than they had planned at the end of the year. In the example of "Wimpy" and paying for the hamburger; the state (Wimpy) does pay for the hamburger (payments to school districts); it's just the payments are stretched out Wednesday through Monday.
School districts expect to receive their state aid payments spread out over the year because school aid payments are comprised of a combination of 90 percent of the current year's entitlement and 10 percent of the prior year's entitlement. The school districts are accustomed to this split payment structure because the 90/10 formula for school aid payments has been in effect since the 1980s when it was enacted to accommodate fluctuations in student enrollment.
Three decades ago in order to balance the budget, state lawmakers decided to "shift payments" and pay a smaller percentage of the current fiscal year budget and delay a larger percentage of the funding into the next fiscal year. The state has only managed to keep its commitment to the 90/10 percent payment plan nine times in the past 30 years. During the 2010-2011 biennium legislators used this shift once again to help balance the budget, they changed the payment schedule 70/30 for 2011.
Last year the payment schedule was changed for 2012 so that 60 percent is paid in the current with the remaining 40 percent being paid in the following year. The percentage shift occurred during the protracted budget debate that lead to a three week government shutdown. Gov. Dayton's original proposal was to enact the largest school shift in state history; moving from the planned 70/30 payment schedule to a 50/50 payment shift, i.e. 50 percent of the entitled state aid would be paid to schools in the current fiscal year and 50 percent paid in the next fiscal year.
The Republicans who controlled both the State House and Senate said "no" to Gov. Dayton's drastic school shift request. But in an effort to end the state shutdown, Republicans met Gov. Dayton halfway on his 50/50 school shift request and agreed to move the aid payments to 60 percent in the current fiscal year and 40 percent in the next year for the 2012 and 2013 budget cycle.
In recent weeks, the school aid payment has become a hot topic in the Capitol hallways. Some lawmakers are becoming increasingly concerned about the short term borrowing that school districts are making, despite the fact that per-pupil funding was greatly increased to accommodate for any costs that may occur as a result of the aid shift. However, many first term lawmakers don't realize the shift in payments are nothing new; they have been used as a budget balancing tool by the legislature for 30 years. Despite this, some legislators are proposing to speed up aid payments to schools by raising taxes. More tax revenue from hardworking Minnesotans is hardly a solution to the state's spending problem. School districts still receive all their funding; it just arrives in larger payments later than they want. Increasing taxes in order to pay school districts sooner isn't an answer to the state's budget problems.
Local school districts seem to have lost sight of the fact that last session K-12 funding was increased by more than $1 billion for the 2012-2013 budget. In addition to the increased funding; last November 96 out of 126 school districts received voter approval for an increase or renewal of their property tax levy. To say that acceptance of Gov. Dayton's 60/40 school aid payment plan is a "shameful result of Republicans stealing from school districts" is just plain false.
In the "Popeye" cartoon; Wimpy's famous line "I'll gladly pay you Tuesday for a hamburger today" jokingly indicates that "Tuesday" will never come and that Wimpy was trying secure a free lunch without any real intention of ever paying for his hamburger. With school aid payments, the intent of the legislature is quite different; school aid payments are made on a timely basis and in positive budget times re-established to the 90/10 ratio. In light of the billion dollar increase in K-12 funding it is silly to be discussing the schedule of the payments to schools. Schools will get their hamburger and eat it too.
Phil Krinkie, a former eight-term Republican state rep who chaired the House Tax Committee for a while, is president of the Taxpayers League of Minnesota. GOP Gov. Tim Pawlenty recently appointed Krinkie to the board of the MinnesotaStateColleges and Universities (MnSCU) system. You can contact him at: firstname.lastname@example.org.