HELENA — With the state facing a cash flow pinch, Gov. Steve Bullock’s budget director told Superintendent Elsie Arntzen spring payments to schools might be delayed one week. She protested.
Arntzen's opposition to the daily budget decision from Bullock is notable, in part, because she is the first Republican to be superintendent in decades, which has shifted the dynamic between the Office of Public Instruction and the governor, a Democrat.
“As Superintendent, I prioritize schools. I have an obligation to schools and I will not delay their payments. The Board of Public Education has had an approved payment schedule since May of 2016,” she said in a written statement. “This state funding is crucial to schools because they budget with the assumption that they will receive this money on time. Schools have bills to pay, too."
Rather than the state distributing about $55 million to districts on March 24, the date set by the Board of Public Education under guidance from the Office of Public Instruction, Budget Director Dan Villa told Arntzen on Tuesday schools might instead be paid March 31, the last day allowable under state law. Previous Superintendent Denise Juneau had supported similar, short-term delays in November and December as revenues came in slower than expected.
Villa described the move as a simple way to manage the state’s cash flow needs that would not have any effect on schools. District advocates did not express any concerns with such short-term delays.
When the state runs into cash flow crunches — which are common this time of the year as Montana waits for income taxes to come in — the first option is to time payments to be as late as allowable under law or contracts, buying a few more weeks or days for additional revenues to come in. School payments are just one example of that. Without such delays, the state might have to consider borrowing cash from other accounts, such as the fire fund, or issuing short-term bonds called Tax Revenue Anticipatory Notes.
Last week the state’s cash balance was $111 million. On Tuesday, after those payments were made to schools in addition to other money coming in or out, the balance sat at $51 million. Higher-than-expected Medicaid collections, among other shifts, meant the state did not have to delay school payments, borrow from other accounts or seek loans this time around.
“It is very common practice for the State of Montana to align payments with revenues. The Budget Office has worked with OPI and the Department of Administration to do this numerous times in the past,” Villa said. “It’s disappointing the Superintendent is attempting to politicize something so routine.”
Montana School Boards Association Director of Government Relations Bob Vogel said he had never heard of a school having a problem with those kinds of short term delays.
“It’s not a concern as long as we know (the payments) are coming. That’s never really been in doubt,” he said. “If the delays were more substantial and something other than a cash flow issue, then we might have concerns.”
The Board of Public Education is likely to discuss the timing question at a future meeting. Executive Director Peter Donovan said he had talked about the need to clarify the payments with the chairwoman and staff attorney, wondering why the board’s duties include setting payment dates if state law already sets deadlines.
“There’s a pretty good schedule in statute already,” he said.
Chairwoman Sharon Carol, an Ekalaka teacher, did not return a request for comment by press time.