The Albert Lea School District will have to deal with a large shift in aid payments because of recent budget decisions by state Legislature.

Lori Volz, director of finances for the district, said it’s been decided that the schools will be paid 60 percent of their aid for the 2011-12 school year and will have to wait until the 2012-13 school year for the other 40 percent of aid promised. Volz said the district will be able to get through most of the next school year without getting loans, but she was positive the school will need loans for the 2012-13 school year.

“We will be experiencing a large interest expense,” Volz said.

Because the state understands schools may have to borrow to pay their bills, schools will get $50 per pupil to pay toward interest costs. For the Albert Lea district that will equal about $178,000.

“That’s the state’s estimate of interest on loans,” Volz said.

Volz said so far the district has had a good cash flow, but if it will only receive 60 percent of aid promised they will have to take other measures. One piece of good news from the Legislature was that special education funding will not be frozen as the district had anticipated. The state had been working toward fully funding special education, and a bill freezing funding did not pass earlier this year.

“They’re trying to make strides to fully fund the formula,” Volz said. “That’s really good news in a tight financial crunch.”

The Albert Lea district was also named one of seven districts to receive more compensatory funding. The program will have the same regulations as the compensatory funding the district already receives, but the district will have to submit a special report with the results of student achievement from the extra funding.

Volz said there are several options the district is considering with this money including reducing class sizes, extra remedial instruction or installation of more social workers. A plan will be in place by the start of the school year for what to do with the funding. The district will receive $150,000 a year for two years for the program. Volz said the program was a good surprise because the district hadn’t budgeted for the funds.

“We were pleasantly surprised,” Volz said.

The state also will allow districts to have more control over staff development time under new regulations. Previous regulations said district’s must set aside 2 percent of revenue for staff development, and now the district will be able to allocate those funds for other things if they choose.

“We will have a much smaller plan in place,” Volz said. “It’s just kind of a reality.”

She estimated it would be about four years before the state set regulations on staff development again. Volz said with less time for staff development the district will have to streamline strategies for staff.

Volz also said the district wasn’t adversely affected during the state shutdown, except for not being able to work on levy or audit preparation because the Minnesota Department of Education website was not available.