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Board authorizes short-term loan from food-service fund and redirects interest earnings to education fund to avoid negative balance
Summary
To avoid a negative year-end balance in the education fund, the board approved a resolution authorizing a short-term interfund loan of up to $5 million from the food-service fund with repayment by Dec. 31, 2025, and a separate resolution to transfer interest earnings to the education fund instead of site-and-construction.
The Round Lake Area Board of Education approved two financial resolutions aimed at preventing the education (operating) fund from ending FY25 with a negative balance. Finance staff asked the board to authorize a short-term interfund loan of up to $5,000,000 from the food-service fund to the education fund, with repayment required no later than Dec. 31, 2025. The board approved the resolution.
Finance staff said the loan is a timing solution permitted by school code to avoid an audit finding that can result from a negative fund balance. The presenter explained the loan is expected to be repaid when the district receives levy and other cash inflows early in the next fiscal year; if a similar negative balance persists at the end of FY26, administration will bring a similar resolution back to the board.
Separately, the board approved a resolution to reallocate projected interest income that had previously been identified for the site-and-construction fund and instead direct that interest to the education fund to help mitigate the operating shortfall. Administration said the change reflected the district's greater current need in the operating fund given the unexpected FY25 deficit and that those interest transfers are an allowable internal reallocation.
The interfund loan motion was moved by miss Planler and seconded by miss Lee; roll call showed the motion carried. The interest-transfer motion was moved by miss Klingler and seconded by Mister Jewett and also carried by roll call.
Board members asked clarifying questions during the discussion about whether the loan merely shifts timing of cash and whether interest will be charged; finance staff said the loan is for timing to remain in compliance with audit rules and will be repaid when levy receipts are available. The board was told such actions are temporary and that administration will continue to bring updates and, if necessary, further resolutions later in the fiscal year.
