Districts 113A, 210 Approve $5.5M Short-Term Loan Agreement
Without the agreement, Lemont-Bromberek Combined School District 113A would have been unable to meet its financial obligations this month.
The school boards for Lemont-Bromberek Combined School District 113A and Lemont High School District 210 made history Monday night, becoming the first two school districts in the state of Illinois to approve an intergovernmental sale and purchase of tax anticipation warrants.
The District 113A Board of Education voted 6-0 during their to approve the issuance of $5.5 million in tax anticipation warrants (TAWs) to District 210 in order to pay its operating expenses this month—effectively preventing the immediate need for state financial takeover. Board member Janet Hughes abstained from the vote.
Across town, the District 210 Board of Education formally approved a resolution authorizing the purchase of TAWs from District 113A by a 6-1 vote, according to Tony Hamilton, director of community relations for District 210. Board Member Mark McMahon cast the lone dissenting vote.
District 113A has been reliant on short-term borrowing to meet its financial obligations since depleting its cash reserves in June 2009. Though administrators and financial advisers began the process of securing the next round of TAWs in October of last year, they were turned down by at least six banks. Without a source of revenue, the district would have been unable to pay its operational expenses, including teachers' salaries, on Jan. 14.
Facing the threat of state financial takeover, advisers for District 113A suggested in late Novemeber a deal with District 210 in which the high school would use its property tax revenue to purchase the TAWs, which is legal under Illinois State Statute 50 ILCS 340, otherwise known as the Investment of Municipal Funds Act. According to District 113A Superintendent Tim Ricker, the deal between the two districts is the first of its kind in Illinois.
With the approval of both school boards Monday, the districts' attorneys will review the documents Tuesday and should close the transaction within 24 to 48 hours, Ricker said. The funds will be wired to District 113A on Thursday, and will be available for Friday payroll.
According to the resolution, the loans must be paid back by June 29, 2011, at a 2.79-percent interest rate. District 113A is responsible for all costs incurred in the transaction, including the cost of legal and financial counsel for both districts.
Several parents, teachers and community members addressed the school boards Monday to thank them for working together and preventing state takeover in District 113A.
According to Hamilton, District 113A teachers Sue Gray, Beth Howell and Maureen Orlando expressed their thanks to the District 210 school board for "thinking outside the box to assist both District 113A and the Lemont community." Another community member, Chris Patterson, applauded the board for "being willing to make tough decisions with the best interests of the community in mind," Hamilton said.
Mary Pollard, a Lemont resident who has two children in District 113A applauded the district for "being creative and coming up with a community-minded solution."
"Thank you to the individuals who set the wheels in motion ... to stave off state takeover, even if it's just for six more months," she said.