By Sarah Stultz and Kelli Lageson, staff writers

Minnesota school districts are one step away from seeing a bill approved that would allow the state to tap into budget reserves and begin repaying about $2.4 billion owed to them.

The House and Senate passed the GOP-sponsored bill Monday on party-line votes. The bill would shift $430 million out of state rainy-day funds to accelerate repayment of state aid to schools delayed in recent years to help cover state budget deficits.

“I think it makes a lot of sense,” said District 27A Rep. Rich Murray, R-Albert Lea. “We have an economy that is improving, we have excess reserves right now and to spend down a little of it to help the school districts with their funding makes a lot of sense.”

Republicans say that newly replenished budget reserves allow the state to settle debts. The GOP plan would cut the state’s reserves from $657 million to about $227 million.

Democrats, including Dayton, say budget reserves keep the state’s finances stable. Some Democrats have proposed repaying schools by closing tax loopholes they say unfairly benefit certain corporations.

Murray said he was unsure if Dayton will approve the bill. Superintendent of Albert Lea Area Schools Mike Funk also said at the school board’s Monday workshop that he was unsure whether the bill would pass.

Typically schools receive their funding on a 90/10 shift, meaning they receive 90 percent of their funding in the first year of the biennium and 10 percent in the second year. That shift is needed since enrollment figures change throughout the year, and the final 10 percent was based on the actual number of students who attended the school.

“The general education revenue is based on the number of students — even partial membership days like if a student went here for a month and then transferred out,” said Albert Lea School District Finance Director Lori Volz. “Tracking student data is crucial; that’s how we get funded.”

In 2010, the shift was down to 73/27, and during budget negotiations in 2011, legislators and the governor settled on a 60/40 shift as part of their solution to fix the deficit.

Volz said because of the aid shift, the district has had to borrow $6 million.

“It’s the first step in replenishing,” Volz said.

The shift was improved to a 64.3/35.7 shift in February, which has already improved the cash flow to the district in March by more than $1 million, Volz said.

She said if the governor passes the bill, the district would not have to borrow again until calendar year 2014.

“If that were to pass it would improve cash flow so we would not have to borrow for a six-month period,” Volz said.