Business Manager: District 113A Needs to Borrow Another $1.8M in 2012

will begin the process of securing another round of tax anticipation warrants, which are needed to cover projected cash flow issues early next year.

During the school board's monthly business meeting Tuesday night, District 113A Superintendent Tim Ricker said it was time for the board to start discussing the district's next round of tax anticipation warrants.

"We really need to answer three questions: When will we do it? How much do we need to consider, and who is going to be providing placement for that issuance?" Ricker said.

District 113A has been reliant on short-term borrowing to pay its bills since depleting its cash reserves in June 2009. Late last year, however, the district was confronted for the first time to pay its bills in January.

On the advice of legal and financial advisers, Ricker and then Board President Lisa Wright approached about a possible loan. Both boards , marking the first time that two Illinois school districts had completed an intergovernmental sale and purchase of TAWs.

In June, the District 210 Board of Education to purchase another $5 million in TAWs from District 113A, which again was unable to secure the loan through a bank, according to advisers from PMA Financial.

Under the agreement, the debt is scheduled to be retired by Jan. 31, 2012, with an interest rate of 2.23 percent.

District 113A Business Manager Barbara Germany said the district will need to borrow between $1.8 million and $2 million early next year to cover cash flow issues once the current debt is retired.

Financial projections indicate that the fund balances will hit a low point of about $432,000 in January and about $1.8 million in March, she said.

Germany said the projections are significantly less than what was estimated several months ago. When the district adopted the 2011-2012 budget in September, advisors at PMA Financial Network said the district would need to issue about $2.5 million in TAWs in February, as well as another $1.8 million in November.

At the time, advisors said District 113A would likely eliminate the need for short-term borrowing by January 2013. However, current information indicates that the fund balances are improving, and that the district could only need one more round of TAWs, Germany said.

"The possibility exists, based on information (that we have now), that we may not have to go back out again (for more TAWs) in November," she said.

One of the questions Tuesday night was whether or not District 113A wanted approach the high school for a third round of TAWs.

"They've been a good partner to us," Ricker said.

Board members agreed that the administration should begin discussions with District 210, but said they would also like to see if any financial institutions would be interested now that the amount needed is significantly lower than it has been in the past.

"I would like to keep the money here if possible," Board Member Al Malley said. "It's not that I don't want to use the high school ... I just want to see what kind of interest there is at this point."

The board agreed to move forward with the district's current advisors at PMA Financial Network to start the borrowing process.

Ricker said PMA indicated to him that they would again go out for private placement, but would also facilitate discussions with District 210. He said everyone at the high school is understanding of the fact that District 113A needs to explore their options to find the best possible deal.

The administration will set up a meeting in the coming weeks with District 210 Superintendent Sandra Doebert and Board President Beverly Marzec to discuss the possibility of another round of TAWs, Ricker said.