The legislative Joint Budget Committee Monday threw a lifeline to six Colorado school districts struggling with cash-flow problems because of proposed Amendment 61.
The committee approved allocation of $2.9 million in state money to the Department of Education’s contingency fund for use as loans or grants to the districts by the State Board of Education.
The districts – Gunnison, South Routt, Cripple Creek-Victor, Hayden, Westcliffe and Eagle – are caught in a bind both because of the peculiarities of school district revenues and the uncertainties posed by Amendment 61.
Most Colorado school districts receive funding from both the state – paid in monthly installments – and from local property taxes, which aren’t distributed by counties until spring. That means some districts, especially those with high local revenues and relatively small state support, are short on cash to pay bills during the fall and winter.
In the past, some districts have used an interest-free loan program operated by the state treasurer’s office, which allowed them to borrow money in the summer to pay bills and then pay it back the following spring after local tax payments were made.
But state Treasurer Cary Kennedy chose not to operate the loan program for the current 2010-11 school year because of concerns about Amendment 61 if passed. The amendment proposes tight restrictions on state and local government borrowing, including the provision that taxes be reduced after a debt is paid. Kennedy didn’t want to be put in the position of seeing state revenues cut after a 2010-11 loan program was wrapped up.
The end of the loan program sent some districts scrambling. The CDE was able to help some by front-loading payments of state aid at the beginning of the school year. Other districts have been able to tap reserves or get bank lines of credit to cover their cash flow.
The six districts involved in Monday’s action were in a particular bind because they don’t receive enough state aid to benefit from front-loading of payments nor do they have sufficient reserves to cover cash-flow needs through November.
The reported needs of the six districts are as follows:
- Gunnison – $1.8 million
- South Routt – $665,000
- Cripple Creek-Victor – $401,867
- Hayden – $249,864
- Westcliffe – $163.670
- Eagle – $70,000 (the district issued $15 million in tax anticipation notes to cover its cash flow but wants state help to cover the costs of those notes)