U-46 needs money by Jan. 1

With Jan. 1 less than a month away, finance officials in Elgin Area School District U-46 are unsure whether the district has enough cash to last through New Year's Day.

To ensure the district can cover a $34 million debt payment due Jan. 1, the U-46 school board on Monday authorized issuing up to $30 million in short-term loans by Feb. 1, 2011.

“We still have a cash flow issue,” Superintendent Jose Torres said Monday, three weeks after the board first reviewed a proposal for the loans. “We need to be prepared in the event we need to issue (tax anticipation warrants).”

Tax anticipation warrants are like payday loans for schools, without the exorbitant interest rates. If U-46 issues the warrants, they will be at an interest rate of 1.97 percent, finance officials said Monday, and will be repaid with property tax revenues.

U-46 finds itself in a cash crunch because the state is $22 million behind on payments to the district (as of November) and Cook County sent out its second-installment tax bills late.

U-46 Director of Financial Operations Dale Burnidge said Monday that the district's ability to meet its cash needs hinges on whether Cook County starts to deliver some of that tax revenue to the district later this month.

“We still have the current need in case the Cook County taxes are late,” Burnidge said, explaining why the board was authorizing the loans. “Getting those Cook County taxes will be key.”

Burnidge said earlier that the finance staff is also looking at ways to restructure the district's debt so payments are smaller and more spread out, though potentially more costly in the long run. The staff may bring a debt restructuring proposal to the board early next year.