District 300 may need $19 million loan

Late payments from the state and looming expenses will likely force Community Unit District 300 to take out a $19 million loan in the next few months to cover general operating costs, including payroll.

School board members authorized the issuance of $19 million in tax anticipation warrants on Monday. School leaders said without the short-term loan the district will run out of cash in the spring, including the $35 million it has in its working cash fund.

“Tax money only comes in twice a year, fall and spring,” Chief Financial Officer Cheryl Crates said. “Around February we start running out of the money we collected in the fall. But we still have to make payroll. Expenses aren't twice a year; they're every month.”

That means the school district would borrow the $19 million in anticipation of the property tax money it expects to collect from the counties in May and June, Crates said.

Once the district collects the property tax money, it would repay the loan by the end of the school year on June 30.

In addition, the state still owes the school district about $9 million in categorical payments for programs like special education, transportation and government grants. If the state catches up with those payments, Crates said the district would not need to borrow the full $19 million.

However, the district is not expecting the state to make any of the payments.

“We can't depend on categoricals right now,” Crates said.

The district last issued tax anticipation warrants in the 2009-2010 school year when it authorized a $11.9 million loan.

“We don't borrow the money until we absolutely need it, but it takes a lot of work to get the warrants done,” Crates said. “Anything from Illinois right now isn't very exciting to investors.”

Late last year, the Elgin Area Unit School District 46 board authorized up to $30 million in tax anticipation warrants to cover a debt due Jan. 1, 2011. But the district did not need to take out the loans because the state came through with a $12 million payment it owed the district in 2010 and Cook County distributed $19 million in property taxes.

Details of the District 300 repayment schedule were not available. Crates said administrators would finalize that information in time for the Jan. 24 school board meeting.