Duluth school district to borrow to cover for delayed state aid

The Duluth school district faces another year of borrowing millions of

dollars to cover delayed aid from the state.

The Duluth School Board approved borrowing $23 million by a 6-1 vote Tuesday night. Last year, the district borrowed $22.5 million to cover deferred payment.

“The state continues to hold a signification portion of our aid payments,” said Bill Hanson, business services director for the district. “And we don’t have enough in savings to cover the difference.”

The state this year is withholding more than $30 million from the district, which is about 40 percent of its operating budget.

Board member Art Johnston voted against the measure, “not because we don’t need it but because I want to make a point,” he said, claiming money taken from the general fund to pay for the long-range facilities plan is part of the reason borrowing is needed.

Superintendent Bill Gronseth said that wasn’t true.

“This has to do with the hold-back from the state,” he said. “It’s 40 percent of our budget. We have bills to pay.”

The most recent reporting of the district’s fund balance puts it at about $6.8 million, which leaves little room for cash flow. More than half the state’s districts last year borrowed to cover for deferred payments from the state. The state, for several years, has been deferring larger chunks of aid from school districts to help balance the state budget. Borrowing affects the general fund of the district because interest must be paid on the debt.

The money the district borrowed last year has to be paid back next month. The district expects to have last year’s deferred payment from the state in time to pay off that debt.

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