Finance committee reviews plan to prepare TRAN if state payments are delayed

The Keystone Central School District finance committee met informally without a quorum and reviewed a potential tax and revenue anticipation note, or TRAN, as a short-term option if state subsidy payments are delayed.

Joni (staff member) said the district's cash position shows liquid balances swept into a money market, a CD that will mature Dec. 12, and modest quarterly interest receipts; she told the committee that if the district still lacks a state-approved budget in December, staff would avoid reissuing a CD and instead keep funds liquid. "If we do not have a budget, I will not put it in a CD. I will make it liquid and put it in the money market account," Joni said.

Joni described the TRAN as a short-term borrowing mechanism available to school districts and municipalities to cover a lapse in revenues between January and June. She said staff's preliminary estimate for a three-month need was approximately $25 million and that a TRAN could be structured so the district only pays interest on the funds actually used. "We would not be charged interest on anything we did not use," Joni said.

Staff reported First National Bank, the district's depository, indicated it would not charge a bank fee to set up the TRAN and could structure it as a line of credit; that would avoid interest on unused funds and minimize paperwork for existing accounts. Joni also said she will consult with KingSpry to confirm DCED filing requirements and to ensure all legal steps are completed. "There's certain paperwork you have to file with the DCED. We want to make sure you cross your t's and dot your i's," she said.

Because the finance committee lacked a quorum, members did not take formal action. Elizabeth (board member) encouraged staff to prepare materials so the board could consider a resolution in December if needed, noting that preparing in advance would reduce staff and legal hours in an urgent situation. Dr. Redmond (staff member) said he would discuss logistics with Joni and Christy as needed.

Staff said next steps include: a short call with KingSpry to confirm filings; continued conversations with First National Bank about rate structure and documentation; and preparing a board resolution for possible December consideration. No motion or vote was taken at the committee level.

The committee noted that if a TRAN is issued, it must be repaid in the same fiscal year, and that final use of a TRAN would depend on actual timing of state subsidy payments and board authorization.