The Orange County Board of Education approved a temporary borrowing policy intended to provide short-term loans to local education agencies (LEAs) and charter schools that lack access to county treasurer lending programs.

Trustees described the policy as an equity measure to help charters and small LEAs bridge cash-flow gaps during times when apportionments are delayed. "They get charged exorbitant rates for short term loans," said an OCDE staff member while describing charter-sector lending problems; the meeting referenced private lenders charging 18% to 25% for short-term borrowing. The new OCDE program ties interest to the rate earned by the county treasurer's investment pool plus a modest spread; staff estimated that rate at roughly 4.5% plus 0.1 percentage point at the time of the meeting.

Why it matters: Charter operators and smaller LEAs sometimes face cash-flow timing problems in the months before major apportionments arrive. Staff told trustees that charter operators have reported paying double-digit interest rates for temporary operating loans. Trustees argued a county-administered option at a lower cost would level the playing field.

Key features discussed: The policy creates a short-term loan facility capped at $500,000 per borrowing LEA at any one time, with loan term parameters aligned to the statutory temporary borrowing provisions in the California Education Code. Loans must be vetted by OCDE financial staff and the charter unit, and repayment is expected through intercept of apportionment funds when available. The department proposed an initial funding cap drawn from a designated special reserve (Fund 17) with a starting pool indicated in board materials.

Board discussion and vote: Trustees praised the collaborative drafting process with charter representatives and county staff. The board passed the policy 4-0. Deputy Superintendent Renee Hendrick and finance staff described a two-step vetting process: the charter financial unit would perform an initial credit and eligibility review and OCDE's central financial team would confirm data and handle transfers.

Implementation and safeguards: OCDE said it would limit loans to entities that demonstrate repayment ability and that the fund size and eligibility criteria were set to avoid depleting department reserves. The policy includes reporting and board oversight provisions; staff said they would present program guidance and an application process to prospective borrowers. Trustees and staff said OCDE intends to begin accepting and vetting requests once administrative materials are available.

Ending: The board framed the program as a pilot to meet short-term liquidity needs for eligible LEAs and charter schools, with OCDE retaining discretion to vet and deny applications that pose undue risk.