Chambersburg Area SD warns missing state budget threatens cash flow; may need short-term borrowing

The Chambersburg Area School District warned the board on Tuesday that a still-unpassed state budget has cut interest income and strained district cash reserves, and leaders said they may need to borrow if the stalemate continues.

The district’s superintendent delivered the update at the start of the meeting and introduced a treasurer’s report outlining the magnitude of the shortfall. The treasurer said, “we are down 20,000,000, almost $20,000,000 in the bank,” and flagged a larger concern about lost interest income as the district’s cash balances decline.

Why it matters: the district has three payrolls in October and each payroll is “just a little over $3,000,000,” the treasurer said. District leaders said they expect to be able to cover obligations through the end of the calendar year but estimated—conservatively—that continuing without a state budget beyond roughly three months would require borrowing to meet payroll and other obligations.

Board members and administrators said the timing and scope of any borrowing would depend on state action. A member of the public, Valerie Jordan, asked the board to place an item on a future agenda asking staff to calculate “the loss of interest income on $74,500,000, which is a portion of the state revenue to the district,” reflecting concern among taxpayers about the local impact of the delay.

The board also heard that the region’s intermediate unit (LIU) has arranged a short-term loan or line of credit with PNC Bank to cover bills while the state budget remains unsettled. A LIU representative said the LIU’s federal funds have been approved but cannot be accessed until the state budget situation clears, creating a cash-flow squeeze for that agency as well.

No formal board action was taken at the meeting on borrowing. District staff said they would continue monitoring cash flow and return to the board with options if borrowing becomes necessary.