Minn. Officials Have Few Details on Spending Cuts

Updated: 02/27/2013 5:26 PM KSTP.com By: Scott Theisen

The deadline for a deal to avert $85 billion in government-wide spending cuts is just days away, but Minnesota officials are still playing a guessing game for where and when federal funding would be slashed in the state.
    
Without clear answers from Washington, D.C., some state agencies have cobbled together a rough picture of how the automatic cuts may affect Minnesotans. Others, like the Minnesota Pollution Control Agency, say they're at a loss.
    
The White House released summaries this week detailing the impact the cuts would have on Minnesota and other states, and President Barack Obama has been making the rounds to highlight them. Republicans have accused the president of political grandstanding rather than staying in Washington to work out a deal with Congress.
    
The state's budget office projects the across-the-board cuts would increase the state's unemployment rate by 0.2 percent and curb job growth by as many as 5,000 jobs.
    
But the nation's Office of Management and Budget and the federal agencies that dole out funding are short on details, state officials have said.
    
"It's hugely frustrating," said Lyle Mueller, finance director for the Minnesota Pollution Control Agency.
    
MPCA receives grants from the Environmental Protection Agency, but Mueller said he hasn't been able to confirm which of them may not be coming.
    
One of the biggest remaining questions state agencies have is when those cuts will take place.
    
"That's part of the difficulty of figuring out the impact," Tony Orr of the Minnesota Housing Finance Authority told a House committee Wednesday. "We don't have any specifics at this point."
    
Minnesota receives among the lowest proportion of funds in the nation from the federal government, but the cuts will likely spread to many different agencies and services. Minnesota Management and Budget is meeting with several state agencies Friday - the day cuts start to kick in - to try to help find some answers.
    
The state's schools, especially those on American Indian reservations in Cass Lake and Red Lake, and programs for special and early education are expected to take the biggest hit. The cuts will also likely affect Minnesota job development programs, national parks, defense contractors and airports.
    
Superintendent Steve Wymore said Red Lake School District gets about a third of its funding from the federal government. He said he's heard that anywhere from 5 percent to 18 percent of that money may not be coming. The district has about 1,400 students.
    
"We just don't know where it's at right now, and that's a real obstacle for budgeting for the upcoming school year," Wymore said.
    
Right now, he's planning for a 9 percent reduction - about $1.6 million - in federal funds. That would call for layoffs and significant cuts to the schools' tutoring resources.
    
"Those students who can least afford this negative impact are going to be the first ones hit," said Tom Dooher, president of Education Minnesota.
    
Dooher said he fears looming cuts to the Head Start program will wipe out many of the early education services. And reductions to special education will spread widespread problems, he said, because schools will be required to shift funding to make up for those cuts.
    
The Department of Employment and Economic Development is bracing for millions of dollars of cuts to programs that help disabled Minnesotans find work and provide job training. Commissioner Katie Clark Sieben told lawmakers Tuesday that those reductions are based on an assumed 5.2 percent cut to DEED's federal grants.
    
Kim Peck, director of DEED's Vocational Rehabilitation Services, said the department is working on several different plans to cope with the cuts "given the lack of any information" from the federal government.

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