Connellsville might borrow to meet July payroll
Connellsville Area school directors will decide Wednesday on a $3.5 million loan package needed to meet the July payroll.
For the first time in 10 years, administrators are expecting to fall short of meeting the $2.6 million monthly payroll. A series of deficit budgets have left only $1.7 million in the bank.
Business manager Eugene Cunningham first asked the school board in May to consider a tax-anticipation note. The district does not receive property tax revenue until August.
"Over the last couple of years, we've been beating up our fund balance," he said.
For the 2006-07 budget, the district is spending more than $800,000 to avoid a tax increase. Projected expenses are $61.3 million, with revenues at $60.5 million.
The preliminary budget in January included a $3.1 million gap and a 0.73-mill tax increase, the maximum 5.8 percent allowed under Act 72 without a taxpayer referendum.
But directors rejected the idea of any tax hike and began working to reduce expenses.
Connellsville Area last applied for a tax-anticipation loan during the 1996-97 school year. That loan was for $3 million.
"When the fund balance is so low, (a loan) provides safe haven for us," Cunningham said.
At a Monday work session, directors voted to place the loan issue on Wednesday's agenda, leaving the name of the lending institution and interest rate blank.
Cunningham said proposals are due Wednesday afternoon. The least costly plan will be acted upon, and he is expecting about five of the 12 lenders queried by the district to respond.
"That'll give us some competitive rates," he said.