Altoona Area SD board authorizes up to $40 million short-term borrowing amid state budget impasse

The Altoona Area School District board on Tuesday approved authorization for a short-term borrowing agreement of up to $40 million to maintain payroll and day-to-day operations if state or federal education funding is delayed.

Administration told the board the arrangement would function like a line of credit: interest is owed only on funds actually drawn, and interest payments would be deferred until the corresponding state or federal funding arrives. The authorization anticipates an expiration date of June 30, 2026.

“Right now the interest rates we’re looking at are approximately 3.5% from one of the larger lending institutions,” said Speaker 1, citing lender offers ranging from about 3.5% to the low 5s. Board discussion focused on timing and scale: Speaker 3 said the district can meet operating needs through December but would likely need to borrow about $10,000,000 a month beginning in January if the impasse continues.

Public-facing board members and participants expressed frustration with the state budget situation and the cost to local districts. A community member (Speaker 8) told the board she was “up in arms” that schools and taxpayers are paying interest because state funding has not been distributed. Speaker 3 estimated the district has lost about $300,000 year-to-date on investments and referenced reporting that withheld funds have generated about $50 million in interest statewide.

The board approved items 5 a through c by voice vote, which included the borrowing authorization. The transcript records an aye voice vote but does not include a roll-call tally by name.

The authorization does not itself obligate the district to draw funds; it allows administrators to secure the borrowing mechanism so cash can be drawn if necessary. The board said the step is a precaution intended to ensure payroll and continuity of services if the state budget impasse extends past the winter holiday period.