U-46 board backs borrowing measure
The Elgin Area School District U-46 board has taken initial steps toward issuing as much as $25 million in bonds to cover its cash needs.
Despite passage of a state income tax increase this month, district finance officials believe the district may not have enough cash to last the current school year.
“Since the increase does not pay the old bills immediately, we still have the need for working cash this fiscal year,” said Dale Burnidge, director of financial operations.
Sale of the bonds would replenish the district’s working cash fund, which acts as a cash reserve to cover day-to-day operations like teacher salaries and heating bills.
In unanimous votes, the school board this week approved resolutions that pave the way for the district to issue up to $25 million in working cash bonds, if needed, in the spring.
“The district will not be obligated to issue that maximum or any amount,” said Bill Hepworth, a bond consultant for U-46.
But if the state does not make good on delayed payments to U-46 ($16 million at last count), there is a good chance the district will burn through its fund balances, including the more than $74 million in the working cash fund, by the end of May, officials say.
At the end of December, U-46 had negative fund balances in its operations and transportation funds, Burnidge said.
Just last month, the district considered issuing up to $30 million in short-term tax-anticipation warrants but did not end up having to take out the loans because it received payments from Cook County and the state.
A public hearing on the working cash bonds is set for 7 p.m. Feb. 28 at the district’s offices, 355 E. Chicago St., Elgin. The board is scheduled to vote on issuing the bonds on March 7.
U-46 residents can force the bonds on the ballot by submitting a petition to the district’s board secretary signed by at least 10 percent of registered voters in the district.
If that unlikely event does not take place, the district can issue the bonds without voter approval.