Belt-tightening ahead?

Proposed cuts from the governor could lead to some serious belt-tightening by state agencies.

On March 17, several state agency representatives gave the House Education Finance and Economic Competitiveness Finance Division their thoughts about Gov. Tim Pawlenty’s proposed budget reductions. No action was taken.

Education Commissioner Alice Seagren said the 4 percent proposed reduction would amount to an $892,000 per year cut for the department. The governor also proposes to reverse statutory operating debt by shifting payments to school districts. The department typically holds back 10 percent of a school district’s money until final pupil counts are in so districts aren’t overpaid.

School districts in statutory operating debt have been allowed 97 percent of the money up front, but the proposal would bring them back to a straight 90/10 split. Seagren said this will create a 6.1 percent savings to the state, though these districts will have to borrow money to make up the difference

“You are one of the very few areas that has a little bit of an increase, even though it’s not much,” Rep. Nora Slawik (DFL-Maplewood) said, and asked what would happen if the department’s budget was cut.

Among items that would be cut include support for teachers and the principals’ institute, Seagren said.

Richard Pfitzenreuter, chief financial officer for the University of Minnesota, said the university is concerned with the level of its proposed cuts.

“We simply feel that $27 million is too deep and too much in this biennium,” he said, adding that the university would have to make cuts somewhere, and would only increase tuition as a last resort.

Dan McElroy, commissioner of the Department of Employment and Economic Development, said the governor’s recommendation includes reductions and transfers. The largest is an $8 million transfer from the Workforce Development Fund, which is used to support displaced workers, as well as another $2 million from the Minnesota Minerals 21st Century Fund.