Minnesota House GOP ties ‘last in, first out’ measure to school payback bill
Megan Boldt, Pioneer Press, March 8, 2012 –
Minnesota House Republicans on Thursday proposed dipping into the state’s budget reserve to start paying back the $2.4 billion owed to public schools. But there’s a catch.
The legislation, which would shift $430 million from rainy-day funds to repay K-12 schools, also includes ending the practice of laying off teachers based on seniority rather than performance.
Rep. Pat Garofalo, chairman of the House Education Finance Committee, said with the state’s positive economic forecast last week, it’s prudent to start paying off money owed to schools.
“I think it’s a higher priority to pay off that debt rather than have more cash on hand,” the Farmington Republican said.
Republican legislative leaders and Democratic Gov. Mark Dayton struck a budget deal last session that included delaying an additional $770 million in state aid for schools to help close the state’s budget shortfall. That brought the total amount owed to $2.7 billion.
That amount is now about $2.4 billion after last week’s budget forecast showed a $323 million surplus.
Democrats said the latest move was just political posturing, especially since GOP leaders tacked on the “last in, first out” teacher staffing measure. It has passed both the House and Senate and was headed to conference committee to iron out differences. But Dayton has indicated he might veto it, calling it an “election ploy.”
Rep. Jim Davnie, DFL- Minneapolis, had two words to describe the Republican plan: “political
brinksmanship,” especially linking the school payback to a contentious issue such as teacher layoffs.
“The very thing Minnesotans got really tired of last year. That’s exactly what this is,” Davnie said.
Garofalo said it’s not a political ploy. Ending seniority-based layoff decisions is a bipartisan issue across the country, he said, with Democratic governors in New York and Colorado supporting such changes. “This is good policy. It’s good for kids,” Garofalo said. “Everyone agrees that it’s outdated.”
The House Republican plan to pay back schools would cut the state’s reserves from $657 million to about $227 million. There’s an additional $350 million in cash-flow accounts, leaving the state with about $577 million on hand. House Speaker Kurt Zellers, R-Maple Grove, said that should be enough money for cash-flow purposes, if need be.
Senate leaders are still examining the bigger issue of the school shift payback.
Minnesota Management and Budget Commissioner Jim Schowalter warned the House Education Finance Committee on Thursday that dipping into the state’s rainy-day fund is a bad idea in terms of fiscal management. “You want to make sure the state is on stable financial footing before you start paying back the state aid shift,” he said.
Democrats argued that depleting the state’s budget reserves is fiscally irresponsible. They prefer a plan to close corporate tax loopholes to pay off what is owed.
The DFL proposal would get rid of the tax preference that allows corporations to shelter earnings offshore. They contend it would bring in about $450 million a year and schools could be paid back in about six years.
The shift in school aid is guaranteed to be a hot- button issue in the 2012 election.
Republicans and Democrats point fingers at each other for the billions of dollars owed schools. In reality, both parties are responsible.
About $1.9 billion in accounting shifts were approved in 2010 when Democrats controlled the Legislature, Republican Gov. Tim Pawlenty was in office and neither side could agree on how to balance past budget shortfalls. Those school shifts were reinstated and an additional $770 million tacked on yet again last session – this time with a DFL governor and a Republican-controlled Legislature – as lawmakers struggled to compromise.