Minnesota school payback bill heads to governor — and uncertain fate

Legislation to pay down $430 million of Minnesota’s $2.4 billion in money owed schools is headed to Gov. Mark Dayton’s desk — and an uncertain future.

The House and Senate passed the two identical bills on Monday after a strategic move last Wednesday to strip any offending policy provisions from the legislation. The authors of the bill called it a “clean” payback of borrowed school funds .

“All policy — LIFO, controversial or noncontroversial policy, agnostic — all policy has been removed from the bill, and this puts the bill in a form that’s going to be easy to support,” Garofalo said at the meeting last week. “It’s a clean bill. No other policy, no other distractions. It just pays back the debt that’s owed to our schools, and it’s something I’m strongly supportive of.”

When added to additional money from budget surpluses that is going to schools, the $430 million buyback more than repays borrowing from the deal Dayton and GOP lawmakers made last session to end the state government shutdown.

But the executive branch questions whether the roughly $600 million left in state reserves and cash flow accounts will be enough to prevent short-term borrowing next year.

DFLers in the House offered a proposal that would have closed tax loopholes to foreign companies that operate in Minnesota and used those funds to fully pay back the shift over time, but Republicans voted it down in mid-March.

Dayton administration Ssokeswoman Katharine Tinucci said on Monday the governor hasn’t issued any new opinions about the shift payback, but again reiterated Minnesota Management and Budget’s concern that it could force the state government to do short-term borrowing.

“That is not how the governor wants to pay back the shift,” she said of the GOP plan.

“I think it’s healthy for us to work to pay back that debt to our schools so that they don’t have to be the ones who are borrowing money and having to empty their reserves,” Sen. Gen Olson, the lead Senate sponsor of the measure, said after it passed off the Senate floor Monday afternoon.

Olson said she didn’t know what Dayton would do and added that she can see both sides of the argument.

“If he doesn’t [approve the measure], it’s probably because we are using the reserve, and, well, I totally understand that, and would prefer not to,” she said. I’ve said I’d like it both ways. I’d like to be able to pay back the shift and protect the reserve, but hopefully we’re disciplined enough that the coming forecast will be on the plus side and we’ll fill that up rather quickly.”

Another controversial policy – the so-called “last in, first out” bill that was stripped out of the shift payback measure last week – advanced out of conference committee on Monday. It has to be passed by both the House and Senate before it heads to the governor.

“It’s best to have that on its own,” Olson said.

Dayton has said he does not favor that measure.

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