Legislature considering amending law which allowed school district payments to be withheld

Work is being done on repealing the Governor’s authority to delay payments to school districts. Bills sent to the K-12 Education Finance Committee (HF 2645 and HF 2783) would preclude future governors from using a 1986 law to borrow from school districts. So far the state has used the law to borrow over $400 million from schools as an interest free loan so the state could pay its bills.

According to a February 2, 2010, article in MinnPost.com, the National Conference of State Legislatures ranked Minnesota number two in states (behind Alaska) that relied most heavily on one-time solutions for budget gaps for 2010. MinnPost reported that the loan

“was a high-stakes bet on recovery from the recession, a strategy for buying time until revenues rebounded. Now it looks like a losing bet. The revenue nightmare persists in state after state along with stubbornly high unemployment. Indeed, rather than turning around as the recession ends, the revenue plunge continues in Minnesota and most other states.”

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