The financial uncertainty caused by the ongoing coronavirus pandemic led Waukegan District 60 to pursue a $10 million line of credit it can use if need be.
The school board approved the move in a unanimous vote at its meeting Tuesday along with another measure that gives the district’s finance officer additional leeway in how much money she can transfer among the district’s funds to meet cash flow needs.
The decision followed a creation by the Lake County Board of a property tax deferred payment program that allows property owners to pay their property taxes over four installments instead of two.
“These conversations that the board’s having tonight are not unique to Waukegan,” said Kyle Harding, a partner with Chapman and Cutler, the district’s bond attorneys. “These conversations are happening throughout the state in large part because of the decisions that counties are making in respect to property tax bills.”
Questions also remain about how much money school districts can expect from the state, which has not passed a budget for the upcoming year.
When asked about education funding Thursday afternoon, Gov. J.B. Pritzker said the state budget is in the works.
“Our hope is, though, we’re going to get kind of a unified voice on the need for federal support for the states, and in particular for the state of Illinois,” Pritzker said. “I hope that Republicans will step up … and advocate for the state with their Republican colleagues in Congress, both in the House and in the Senate, even in other states.”
What kind of federal assistance Illinois receives will play a big role in whether Illinois will be able to meet the education funding targets it had set as part of the new funding formula the legislature passed three years ago, Pritzker said.
More Top Picks Best Schwinn Meridian Alternatives
The new funding formula has been a windfall for Waukegan District 60 and other districts without a lot of local wealth. The formula was specifically designed to send more money to poorer districts while not cutting what more affluent districts were already receiving.
The $10 million line of credit is a “precautionary measure,” said Gwendolyn Polk, the district’s associate superintendent of business and financial services. “We don’t anticipate that we would have to draw from the money, but it is better to prepared and have it available to us in light of everything that’s going on rather than to not have it.”
The district would only incur interest on money actually drawn from the line of credit, not the entire $10 million, Harding said. Instead, the district will pay an annualized 1% fee on the amount of money available.
That means if the district doesn’t use any of the money, the line of credit would cost $100,000 over the course of a year, Harding said. The plan is to maintain the credit for just over two months.
“You’re buying an insurance policy to ensure your liquidity and to protect you against potential downturns, including late receiving real estate taxes … or categorical grants (from the state),” district attorney Thomas Morris said.
The school board also gave Polk more leeway Tuesday evening to transfer money internally so that it can use money it has on hand to pay its bills.
The internal transfers are something Polk is approved to do each year, but in light of the uncertainty around when various district revenue will come in, she asked for the total amount she’s allowed to transfer to be increased.