Tecumseh Public Schools board authorizes up to $1.5 million state-aid note in case state budget delay continues

The Tecumseh Public Schools Board of Education voted unanimously Sept. 22 to approve a resolution authorizing the district to borrow up to $1,500,000 against anticipated state school aid if the state fails to pass and distribute the fiscal-year budget on schedule.

Board members approved the resolution after a staff presentation explaining the measure is a cash-flow safeguard, not an immediate borrowing. Kelly Glenn, finance staff, told the board the district normally receives a monthly state aid payment on the 20th and that a delayed state budget could produce a shortfall by late October. She said the district’s estimate of total state aid for fiscal 2025–26 is $26,344,502 and that 5% of the district’s prior-year operating expenses is $1,651,743 — a statutory threshold referenced in the resolution.

The resolution authorizes the district to solicit bids and enter a note with a bank or financial institution in an amount not to exceed $1,500,000. Glenn said bids are scheduled to be sought Oct. 8 and that the board can halt the process at three points: after approval, after bid receipt, or before final execution if the state budget is signed and payments resume. She told the board the note’s cost would be interest only, with no prepayment penalty, and that the district intends to repay any borrowed amount promptly once state aid funds are received.

Trustees asked how loans would be repaid and whether October and November payments would be consolidated if delayed; Glenn said state processing timelines vary and she could not guarantee the specific timing but that the $1.5 million would cover the district’s cash needs while waiting for state payments. A board member asked for an estimate of legal fees to issue the note; staff estimated attorney costs in the $2,000–$5,000 range.

The board voted by roll call: Trustee Brooks, Trustee Simpson, Trustee Martinez, Trustee McGee, Trustee Davis and the board chair all voted aye. No nay votes or abstentions were recorded.

The resolution language cited state law authorizing school districts to pledge anticipated state school aid for notes and referenced the Department of Treasury and Michigan Department of Education processes. The board included language allowing the district to limit borrowed amounts below the $1.5 million cap if actual needs are smaller.

The action temporarily protects payroll and operations in the event of a state budget impasse; staff said the district could cancel the borrowing if state payments resume before the district executes a note.