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McCombs board discusses 16th‑section loan option to cover construction while awaiting federal reimbursements
Summary
Board members and a financial adviser discussed using 16th‑section principal as an internal loan to cover construction payments, asked questions about repayment, legal limits and whether federal ESSER/ARP reimbursements can later be applied to the loan.
The McCombs School District Board of Education discussed taking an internal loan from its 16th‑section principal fund to cover construction and related capital costs while the district awaits federal reimbursements.
At a work session, financial adviser Rusty Russell told the board the district could borrow from its 16th‑section principal, pay itself back at about 4% interest over as long as 20 years and that an illustrative annual payment on the contemplated amount would be roughly $265,000. “You pay yourself back at a 4% interest rate over a term of up to 20 years,” Russell said.
Board members pressed for clarity on several practical and legal points: whether interest earned on the 16th‑section investments could be used first; whether taking a loan would affect…
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