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Kiski Area SD warns state budget impasse could shave $12.3M from district revenue; board weighing short-term borrowing
Summary
District finance staff reported a projected $12.3 million shortfall if a Pennsylvania state budget is not passed, outlined cash balances and mandatory payments, and said the administration is exploring a line of credit and other short-term borrowing to manage cash flow.
Rick, the district finance representative, told the board that an unsettled state budget could significantly reduce the district's state subsidy. "So as of right now, if this was a normal year, we would have received about $12,300,000 of state funding," he said, describing the figure as the district's expected state revenue loss if the budget is not finalized.
Rick gave a snapshot of cash on hand: approximately $15,958,000 in the general fund and roughly $1.9 million in outstanding deposits that would bring the projected cash-on-hand to about $17,900,000 once received. He said contracted mandatory payments (payroll, pensions, taxes and contracted services) amount to roughly $11,800,000, leaving a working balance the district estimated at about $6,100,000 for the general fund by year-end.
Board members and the solicitor discussed short-term options. The solicitor, Mister Repack, suggested districts sometimes use tax-revenue anticipation notes (TANs) if cash-flow pressures arise; Rick said discussions with the bank about a line of credit (he cited a target request near $15 million and noted an interest rate discussion around 4%) are already underway and could be pulled forward if necessary. Board members asked about lost interest income; Rick said the district planned for roughly $50,000 a month in investment income and warned that the budget impasse reduces those earnings.
The board also discussed restrictions on capital funds: the solicitor noted capital/bond funds cannot legally be used for operating expenses under the debt-act rules, so the district must preserve separation of operating and capital funds. Rick flagged other revenue uncertainties as well — food-service reimbursements were described as subject to federal funding status — and said the district will continue monitoring collections and present any request for authority to borrow at a future meeting if needed.
No borrowing action was taken at this session; the board tasked staff to continue monitoring cash flow and to bring formal borrowing requests to a future meeting if required.
