Plum School District leaders approve $14M loan to cover day-to-day costs
The state budget impasse prompted Plum School District leaders to approve a $14 million loan Tuesday night to cover day-to-day costs through the end of the school year.
The district, like others across the state, has not received its full complement of state funding for 2015-16 because the Legislature has failed to finalize a budget for the fiscal year.
District officials are owed about $14 million from the state, district Business Manager Eugene Marraccini said.
Taxpayers will pay about $46,000 in interest over the 100 days the loan is used, plus $12,500 in fees, Marraccini said. The interest rate will be 1.44 percent through S&T Bank. If the state has not approved a budget by June 30, Marraccini said, the district will have to borrow more money.
Marraccini said the district has about $450,000 in its general fund and $5.4 million in its investment funds. The district's capital improvement fund contains about $5 million.
“We're not broke, but we're going to be broke,” said board member Sal Collela, who heads the finance committee.
The district is expected to receive $1 million from the state this spring in retirement fund reimbursements, Marraccini said.
The district received $9.1 million in state funding in January when Gov. Tom Wolf signed a line item-vetoed budget, but the bulk of that money financed a nearly $7 million bond payment, and the remainder was scheduled to run out at the end of February or early March.
Marraccini said about $24 million of its budget comes from state funding and carries the district through half of the year.
In January, the board approved a preliminary, $64 million budget for the 2016-17 school year with no tax increase. The budget must be finalized by June 30.
Emily Balser is a Tribune-Review staff writer.