The Mehlville School District needs to borrow more money than the amount initially approved by the Board of Education last month to address short-term cash-flow issues.
District officials were scheduled to request the school board’s approval of a resolution today — Nov. 19 — authorizing the issuance of an additional $3 million in tax anticipation notes with Midwest BankCentre.
The Board of Education will meet at 7 p.m. in the boardroom of the Administration Building, 3120 Lemay Ferry Road.
Board members voted last month to allow the district to issue $7 million in tax anticipation notes with the same bank in order to alleviate a traditional, short-term lull in tax revenues.
They authorized the district to borrow up to $1.5 million for its general fund and $5.5 million for its teachers’ fund.
“The additional amount requested of $3 million will provide a cushion if cash receipts from the state and early tax collections are lower than projected,” Chief Financial Officer Noel Knobloch wrote in the board book for tonight’s regular board meeting. “As a result of (Senate Bill) 711, tax bills in St. Louis County are now mailed 30 days later than prior years.
“While the district should still receive the same amount of tax revenue, the timing of approximately $3 (million) to $4 million of the receipts will be delayed by 30 days.”
Of the $3 million requested, $1 million would be designated for the incidental fund, while $2 million would be marked for the teachers’ fund.
The interest rate on all $10 million in notes, which are tax-exempt, will be fixed at 2.6 percent. Their maturity date is Jan. 31, 2010.
In August, the school board gave district officials the go-ahead to participate in the Missouri School Boards’ Association’s Advanced Funding Program, which was developed to help school districts that traditionally face cash flow programs in the fall quarter.
However, Knobloch subsequently informed board members that the district would pay lower borrowing costs by issuing tax-anticipation notes with Midwest BankCentre than it would participating in the MSBA program.
The district sought loans with the bank last year when it learned that the advanced funding program was unavailable due to problems in the financial markets.
“It’s kind of like having an account you can draw off of … we’re just trying to draw what we need, when we need it,” Superintendent Terry Noble said last week of the tax-anticipation notes. “We’re going to draw that additional amount to get us through. Dec. 15 is kind of the magic date for us.
“That’s when we start really getting collections from local revenue. So it might help us with another payroll or so.”