Hopkins Public Schools Still Weathering Shutdown Storm

Nearly two weeks into the state government shutdown, Hopkins Public Schools’ finances remain strong enough to keep ills from the shutdown out of the classroom.

The district will receive all but $3 million of the $58 million due in state aid because of Ramsey County District Court Judge Kathleen Gearing’s ruling that education funding is a core function of government.

“We’re in pretty good shape right now,” said John Toop, the school district’s director of business services.

Hopkins gets about two-thirds of its revenue from the state. The district began that it could make it through nearly an entire school year using a combination of savings and borrowing.

Gearing’s ruling means the district, in one key respect, is actually doing better than it would if lawmakers had already agreed upon a budget. That’s because of so-called payment shifts.

The state divides school payments into two parts. Historically, schools received 90 percent of their payments the same year students were counted and 10 percent the following year.

However, over the years, the state has shifted more weight to the second payment—first making it 15 percent, then 20 percent and now 30 percent—in order to balance its budget. This forced some schools to borrow money until they received the second payment. With Gearing’s ruling, the law reverts back to the original 90-10 payment system once the lesser splits expired. With Gov. Mark Dayton offering legislators a 63-37 split, schools are almost certainly getting more now than they would if legislators had a deal with the governor.

This doesn’t mean the situation will remain as is. If the education bill comes back with less money upfront, the state will reduce subsequent payments, said Toop, adding the district would still be in good shape.

Hopkins has the aforementioned savings and credit to get it through until the final state payment. Perhaps most significantly, Hopkins’ own budget already anticipates an extremely pessimistic 50-50 split and 3 percent cut in per-pupil payments.

Hopkins and other school districts also face a slight risk of being hurt by Fitch’s downgrading of Minnesota’s bond rating. State ratings can affect the interest costs for schools that borrow the state’s credit score through a so-called “credit enhanced rating.”

But Toop said he’s not too worried because just one of the three main rating agencies lowered the score—and that was the agency he sees as the third most important. He’d be more worried if the state had its Moody’s rating lowered.