Beau Yarbrough, Staff Writer
Created: 08/10/2012 03:41:36 PM PDT
Like a homeowner living beyond their means, California is paying some of its bills late, by months or even years.
And this “the check is in the mail” method of balancing the state budget has forced many of California’s 977 public school districts to either dip into shrinking financial reserves or to pay borrowing fees and interest on short-term loans to cover their expenses in the meantime.
For the first time this year, the Yucaipa-Calimesa Joint Unified School District had to take out a short-term loan, known as a Tax Revenue Anticipation Note (TRAN) to cover a temporary $6 million budget shortfall resulting from money from the state coming in late. The state has delayed $14.1 million in payments to Yucaipa-Calimesa by more than a year.
“A year ago we saw this coming, so the (school) board had a heads-up,” said George Velarde, the district’s assistant superintendent of business services. “They could see year after year, how the cash flow line gets lower and lower, and dips below the zero mark in the spring.”
Under normal circumstances, the borrowing fees and interest, which pull from the same pool of money used to pay employees’ salaries and benefits, wouldn’t be significant compared to the multi-million school district budgets. But at a time when every penny counts for most districts – Yucaipa-Calimesa pink-slipped more than 30 employees this year – it adds up. Velarde’s district paid $38,000 to take out its TRAN.
“We’ve been taking out $4 to $5 million (loans). Some districts are taking $11, $12, $13 million,” said Lisa Shoemaker, the assistant superintendent of business services for the Claremont Unified School District.
Her district has been paying between $20,000 to $25,000 in borrowing fees, and about $54,000 in interest, for an added expense of $69,000 resulting from the state paying the district months or years behind schedule.
“That’s an entire teacher. That’s a huge amount of supplies for schools. That’s a large amount of money that’s coming out of taxpayer funds that we are now having to pay toward the cost of a loan,” she said.
“This is a necessary evil to make sure we have enough cash to pay our bill,” said Alejandro Alvarez, associate superintendent of Business Services Division for Fontana Unified School District.
“We borrow from our nutrition fund, from (the early education fund), from our construction fund … but the amount that’s deferred is so astronomical, that we have to borrow some.”
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