Minnesota May Delay School Aid to 300 'Wealthy' Systems

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St Paul--Minnesota school districts with sizable cash balances or other bookkeeping surpluses may be forced to help ease the state's financial crisis by deferring their December state aid.

Minnesota, with a deficit exceeding $500 million, already has temporarily frozen $34 million in state aid to cities, counties, and townships scheduled to be paid out for this month.

In addition, Governor Albert H. Quie has asked all state departments to reduce expenditures by as much as 12 percent, a move that could save an estimated $1 billion over the next 12 months.

Schools May Assume Burden

Governor Quie, a Republican, and leaders of the Democrat-controlled legislature are considering a plan to force schools to shoulder some of the state's financial burden. State aid6to local schools accounts for about one-third of the state's $8.7-billion budget.

The state is scheduled to pay about $100 million to local school systems next month. By withholding payments to school systems with large surpluses, the state hopes to save as much as three-fourths of that total. According to one plan, the state would distribute the aid, along with interest on the money deferred, sometime in the future.

'Positive Fund Balances'

A recent report by the state department of education showed that 352 of the state's 437 districts had "positive fund balances" as of last June. But such balances are usually based on expected revenues from the state, and any reduction in that revenue would cause those surpluses to disappear rapidly.

Donald C. Hill, president of the Minnesota Education Association (mea), a number of whose affiliates struck this fall after reaching an impasse in negotiations, has used the existence of surpluses to justify demands by teachers for higher salaries.

After a conference with Mr. Quie, Mr. Hill said: "We told him if they use a formula whereby they withhold payments just from districts that have surpluses, then it's understandable."

Governor's Action Reversed

A similar "rob-Peter-to-pay-Paul" plan was discussed as a possibility last year when Governor Quie reduced state aid to local schools by about 9 percent. Monthly payments to the districts were reduced for two months, then eliminated. However, the legislature this summer reversed Governor Quie's action and restored the funds.

Under current law, only the legislature could delay or trim aid to schools. Mr. Quie has said he will call a special legislative session to deal with all aspects of the financial crunch. The date is not yet set, but the session is expected to begin by the end of this month.

Vol. 01, Issue 10

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