The Albert Lea School District will see a maximum delay of about $277,000 in its March school aid payment from the state, the district’s Finance Director Lori Volz said Wednesday, a day after the Department of Education announced it would delay as much as $423 million in aid payments to schools to help the state pay its bills.

Volz said the district fortunately will be able to manage the delay in aid by absorbing it with its cash flow, and it will not have to borrow money to cover it at this time. The more serious concern, however, is the next fiscal year when cuts are anticipated to be larger.

The finance director said the Albert Lea School District was one of 231 districts throughout the state that received a memo Tuesday about the deferrals.

The delays will start in March with repayment by the end of May.

She said the Albert Lea School District’s deferral is about 25 percent of that particular aid payment.

The Department of Education sent the notice to districts with more than $700 per student in reserves. Those districts will have a chance to appeal.

The delay is not directly related to Minnesota’s projected $1.2 billion budget deficit, but it is was borne of an anticipated cash shortage as government bills outstrip expected revenue in March, April and May.

State officials also said they would delay a $52 million payment due in March to the University of Minnesota, and delay corporate and sales tax refunds for up to 90 days.

State law requires Gov. Tim Pawlenty’s administration to withhold the school aid before resorting to short-term borrowing, but that didn’t stop some lawmakers and school officials from criticizing the move.

This is the first time the state has used the law, passed in 1986, to cover the state’s money woes.

United South Central

United South Central School District Superintendent Jerry Jensen said his school was also affected adversely by Tuesday’s announcement.

The district had already been put in a position where its cash flow suffered as a result of the last legislative session, and now there’s the new round of deferrals, Jensen said.

He said the state is projecting the USC district will have almost $500,000 deferred from its March payment until the end of May.

Fortunately, the district had already done some aid anticipation borrowing — when schools have access to borrowed dollars in case of aid issues — Jensen said, so this should cover the deferrals.

“If it isn’t enough, I know the schools are trying to pull together and do another round of borrowing,” he said.

“It’s going to be difficult to get through this, but the state has a problem. We all have to recognize this, and they have to do something.”

He called the deferrals a short-term fix.

“It’s going to be inconvenient for schools, but if the state can afford short-term borrowing and maintain their bond ratings, hopefully that will be of benefit to us in the long run,” Jensen said.

Superintendents from Glenville-Emmons and Alden-Conger were not able to be reached for this story.

— The Associated Press contributed to this report.