CFO warns district could need short‑term borrowing as state budget delay cuts cash flow

Elizabethtown Area School District finance staff told the board on Sept. 9 that the district is facing a cash‑flow squeeze because the state has not released several reimbursements owed from FY2024–25 and the 2025–26 state budget remained unapproved. CFO Tom Strickler said those delays reduce available cash and, absent state payments, the district may need to seek short‑term borrowing later this fall.

Strickler outlined recent figures and operational pressures: the district's unaudited FY2024–25 accounts showed an approximate $4.5 million year‑end shortfall prior to expected state and federal payments that the district has not yet received. Strickler told the board the unreceived amounts include roughly $1.4 million in state revenue and about $240,000 in federal receipts from the prior year; he said those funds would reduce but not eliminate the shortfall. He also noted recurring cost drivers from 2024–25: higher benefits ($1.2M over budget), additional purchase services and supplies (repairs/maintenance), transportation and a capital transfer tied to prior bond activity.

Fund balances and liquidity: Strickler gave a fund‑balance snapshot (unaudited): general fund about $11.2M as of July 1, 2024; capital reserve approximately $21.7M at the same date (reduced since by bond spending); cafeteria fund $3.14M and a small health fund. He told the board monthly payroll and benefits cash demands are roughly $2.0M, so once unrestricted cash falls below that level the district will need to borrow and warned that borrowing costs and fees would apply.

Timing and mitigations: Strickler said some state reimbursements are legally required and one near‑term payment ("slots money"/homestead/farmstead reimbursement) of roughly $558,000 should arrive even without a full budget. He advised trustees that if a budget is not signed soon the district could begin formal steps to solicit short‑term loan bids and cautioned that state reimbursements typically arrive three weeks after a signed budget. The district plans to use limited fund investments for working cash and to stagger capital‑reserve maturities to preserve liquidity. He also noted permitted temporary reductions in certain required payments (public pension reimbursement timing) under state law could provide short‑term relief.

Board reaction and public context: Trustees asked about committed fund balances and whether the board could uncommit reserves to extend runway; Strickler said that is administratively possible but should be decided after the audit closes. Several board members urged prompt outreach to state elected officials to press for timely payments. Strickler and others listed unanticipated maintenance and equipment failures since July (auditorium lighting, HVAC units, cafeteria freezer loss, vehicles), which have added unplanned contractor and parts expenses.

No borrowing motion passed on Sept. 9; the board asked administration to continue monitoring cash and to prepare information on borrowing options if the state does not act by late October.