The Community School District (CSD) Board of Trustees on Jan. 2 approved negotiating a $450,000 short-term line of credit to assist with cash flow. The motion was in response to accumulating bills and ongoing discussions as the district awaits reimbursement for flood-related damages.  

Alternative Organizational Structure 98 Superintendent Robert Kahler asked the board to approve the loan, which he said was also recommended by the district’s financial consultant. He said the CSD will have expenditures due before tax revenues and the money could be used for payroll and to release checks that have been written to vendors.  

“... If nothing unexpected happens between now and the end of the year we'd probably be OK,” he said. “But if the last three years taught us anything, something is going to go wacky. And if the towns ever have any issues with cash flows as well, if our payments are delayed, it creates a whole potential cascade.” 

Kahler said the CSD is not running in the red, but is in a tight spot. In addition, he said if the district fails to pay bills it is responsible for triple damages plus legal fees. Overall, the board discussed the line of credit as a way to provide a financial safety net. 

Kahler said the district needs the money because reserves have been drastically reduced, partly by design to lower taxes. In addition, he said flood-related costs were paid out of the reserves but have not yet been reimbursed. He said the CSD may need a similar line of credit next year as reserves get built back up.

Kahler said the upcoming line of credit, or tax revenue anticipation note, will be repaid this fiscal year, which ends in June. He said the note will not require additional taxes to be raised and no expenditures will be required beyond what has already been authorized. 

Kahler said he had not yet begun negotiations with banks for the note because he was hesitant to move forward without the board’s approval. He expects the interest will be similar to a municipal rate.  

Several board members expressed discomfort at not knowing the terms, but the vote was unanimous. “We don't have the money that we usually have. We need the line of credit,” said board member Ronnie Campbell. The board requested the note be with a local lender and that they receive regular updates on how it is used.  

In public comment, Denise Griffin said the size and scope of the CSD warrants that the board receive more financial information at each meeting and more time to make such decisions. “I'm flabbergasted that you were asked to vote on a loan without knowing what the interest rate is going to be,” she said.  

Tom Perkins echoed her concerns and said Kahler convinced the board to authorize the line “which is definitely going to cost taxpayers money, without any idea of what the terms are.” In addition, he urged that the CSD School Board also vote on it at their next meeting, so the trustees are not the only “fall guys” if something goes wrong. 

At the end of the meeting, CSD school board member Abby Jones said she disagreed with the two and told the Register she thought Kahler was doing well. However, she said fiscal issues have gotten complex with the building repairs and Alternative Organizational Structure (AOS) 98 restructuring its financial department. 

"Sitting through all those meetings you can see, it's just a hard, horrible decision (to have to make), but these (funds) are really needed,” she said. She later added, “At some point, our one job of the CSD is to hire him. And we have faith in him. And he gives us all the information whenever we ask.” 

In other business, the board of trustees approved seeking more accurate estimates for repairing the middle-elementary school. At their Dec. 19 meeting, the board was presented with updated order of magnitude estimates for repairs, including projects that could be cut. At the January meeting, the board expressed interest in getting the work started soon to avoid costs associated with delay. 

“Both the educational impact and value engineering work has been done and analyzed and reanalyzed. It's very tight,” Kahler told the board. “You have more than done your due diligence.” 

As part of the new motion, they cut about $3.4 million in items the architects deemed deductible, including reducing the site scope, triple-pane windows and an elevator refurbishment. And they requested information on around $1.9 million worth of projects including locker room renovations, video surveillance upgrades and replacing the dry sprinkler system. “Just because we’ve got prices on all of this doesn't mean we are going to move forward on all of this,” said Trustee Darrell Gudroe.