U-46 may seek short-term loans

Elgin Area School District U-46 isn't in a precarious cash flow situation just yet, but it's getting close.

Deeming the move a "payday loan," the school board has signed off on a resolution that would allow the district to borrow up to $15 million to cover expenses as it waits for promised state aid and Cook County property tax revenues.

If money doesn't come through from either of those sources soon, Chief Financial Officer Ron Ally advised the board, tax anticipation warrants would have to be issued sometime in March.

"We will not borrow this money if it's not necessary," Ally said. "We want to avoid paying interest if we can."

U-46, currently $48.6 million in the red, is now facing its largest deficit since 2003.

The district first began talking about the possibility of issuing tax warrants last spring, and then again in October, but put the decision off, Superintendent Jose Torres noted.

The state is now about $13 million behind in payments to the 41,000-student district.

U-46 has not issued tax warrants since 2003, when it borrowed $34 million to replenish district coffers.

Other suburban districts have found themselves in similar predicaments. Carpentersville-based Community Unit District 300 in January plans to borrow $11 million to cover expenses while the district waits on $6 million in past-due state funding.

In November, Palatine Township Elementary District 15's board of education approved a resolution authorizing the district to - if needed - issue up to $7.5 million in warrants if necessary.

In a recent message to school officials, state Superintendent Christopher Koch warned that districts may not see the full amount they are owed.

"The state utilized federal stimulus funds during FY 2009 and 2010 to make General State Aid payments and those federal funds are gone in FY 2011," Koch wrote. "In order for education to receive level funding during FY 2011, members of the General Assembly will either need to raise at least that much in new revenues or will have to reduce that much from other areas of government. I am hopeful that we will be level funded, but I think everyone must acknowledge the possibility of a substantial decrease in funding for this year," he wrote.

The resolution allowing U-46 to borrow the money will expire in June, at the end of the fiscal year.

Referencing Koch's letter, Ally noted that he is "very concerned" about state funding in the coming months.

"I almost think we have to plan on not getting (all of) the money from the state this year," board member Karen Carney said.