Bethlehem Area SD staff report tightening cash flow, recommend short-term borrowing options

Finance staff for Bethlehem Area SD told the Finance Committee on Oct. 13 that the district’s cash balance is projected to decline sharply after November and could fall to less than two months of operating expenses by December if the state budget remains unsettled. The presenter recommended short-term borrowing options, including a drawdown revenue anticipation note (RAN), and outlined a 45– to 60-day timeline to implement the measure.

The recommendation matters because the district is in the middle of capital work, including a new elementary school. "So as of the October, we're projected to have a 109,000,000," the presenter said, and later described how cash begins to "dwindle down" month to month after tax receipts taper off. He said using reserves or delaying bond issuance are possible stopgaps but would reduce flexibility for scheduled capital projects.

City and board members pressed staff on timing and process for borrowing. The district’s financial advisor engagement and a public RFP process could return bids in about a week, with approvals taking about seven days; staff said a realistic implementation timetable is 45–60 days and that the committee could be presented with a resolution in November to begin the RAN process. The presenter said a RAN functions like a drawdown line of credit — fees are paid up front and interest is paid only on amounts borrowed.

A committee member asked whether payroll would be affected. "We will continue to pay his staff, the teachers, the staff, and the administrators throughout all of this," another participant replied, and the presenter confirmed that pay would continue under the district’s current arrangements.

Staff also discussed longer-term options: uncommitting some general fund balances, delaying the issuance of the next financing round, or, as an alternative described in the presentation, a state debt intercept where the state assumes bond payments. Staff cautioned all options carry trade-offs for credit rating and for scheduled projects; the presenter noted a committed capital reserve of about $44,000,000 that could provide temporary relief but would reduce funds available for summer projects and ongoing capital work.

Next steps: staff said they will monitor state budget developments and could return in November with a resolution to launch a RAN or other short-term borrowing if needed. The committee did not take a formal vote on borrowing at the Oct. 13 meeting.