Batavia school district officials anticipate that by the beginning of June, the district will have less cash in reserve than they like.
So the school board Tuesday agreed to borrow $5 million from two other school districts.
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On May 21, the Batavia district will sell tax-anticipation warrants, bearing an interest rate of .635 percent, to Downers Grove High School District 99 and Valley View District 365-U.
Batavia intends to repay the debt by June 28, said Kris Monn, the district's assistant superintendent for finance.
Borrowing the money will cost the district $10,763 in interest and fees.
Monn assured board members the district will still have a surplus in its budget at the end of the fiscal year June 30.
The loan will be repaid from tax payments. Kane County expects to send some tax receipts at the end of May, then a major payment at the end of June and the rest in the fall. Late payments of state aid also were a factor, Monn said after the meeting.
The district last used tax-anticipation warrants in 2006.
Board member Kathleen Roberts noted it was the first time she heard of a school district borrowing from another school district.
It was first done in Illinois in December 2010, when Lemont High School District 210 lent money to Lemont-Bromberek District 113A. Lemont-Bromberek was in financial difficulty at the time, including being on the state education board's financial watch list. Investors were leery of the district's status, the financial status of the state, and discord on the school board, so none wanted to buy the warrants. That put Lemont-Bromberek in danger of not making its January payroll and therefore being taken over by the state, according to a statement on District 210's website.
Monn said the interest rate is better than the investors could get through conventional short-term investments.
"I think this is an excellent strategy for short-term debt," Monn said.