Elmbrook board approves $9 million tax-and-revenue note to cover November–December cash shortfall

The Elmbrook School District Board of Education on Oct. 13 voted unanimously to authorize a taxable tax- and revenue-anticipation promissory note for short-term cash flow purposes in an amount not to exceed $9,000,000 from Town Bank.

District staff told the board the borrowing is intended to cover the district’s low point in cash flow in November and December before property-tax revenues are received in January. Ben Praetor, a member of district administration, said Town Bank’s offer allows unlimited draws during the line’s term and that the district expects to repay the loan quickly to minimize interest costs.

Why it matters: Wisconsin school districts commonly use short-term borrowing at year-end to bridge the timing gap between expenditures (including payroll) and the county or state distribution of tax revenues. Board members discussed alternatives, including prior short-term borrowing from the city and the timing of previous draws. Ben Praetor said last year’s short-term borrowing trend reached about $11 million and cost roughly $165,000 in interest expense on the district side; after offsetting interest the district earned on unused funds, Praetor said the net cost was notably lower. For the current offer, he estimated interest costs of about $50,000.

Board discussion focused on limits and safeguards. Sam Hughes pressed administration for assurance that the line would not be used after January and asked whether additional board approval would be required for future borrowing. Board members and staff said board approval would be required before accessing the line for new borrowing beyond the intended period.

Roll call: The motion to approve the resolution authorizing the taxable tax- and revenue-anticipation promissory note from Town Bank carried on a unanimous roll-call vote: Mary Wacker, Preetha Kurihara, Jean Lambert, Wes Silla, Cheryl Mills, Sam Hughes and Scott Wheeler voted yes.

Next steps and context: Administration said the district had solicited proposals and chose Town Bank in part for the flexibility of unlimited draws. Officials said they will aim to minimize interest costs by borrowing only what is needed and repaying promptly after tax receipts arrive.

Ending: The board approved the borrowing as a one-year line of credit and asked administration to return with any changes to the anticipated timeline or if additional board authorization will be required for future use.