Declining Tax Revenues Force Saline Schools To Borrow To Cover Bond Debt
District to borrow $103,000 to help cover gap in principal and interest payment.
Hits from reduced taxable values and tax abatement are forcing Saline Area Schools to borrow money this year from school loan revolving fund.
The district needs to borrow around $103,000 to meet its $10.3 million loan payment. The district came up short after tax revenues didn’t cover the need.
The Board of Education approved the loan Tuesday night.
“Last year we were able to make the payment,” Finance Director Janice Warner said. “This year we moved back in to the borrowing mode.”
The reason for that is taxable values has declined and the district has taken hits from tax abatements issues by local governments and from revisions in the value of corporations, Warner said.
The district levies seven mills for all its debt loans. Sometimes, like this year, the levy doesn’t cover the principal and interest. The school loan fund picks up the difference, Warner said.
“As those bonds get paid down, eventually we will get to the point where that seven mills is more than we need to pay the principal and interest,” she said. “Then we can start paying back the bond loan fund.”
The district is right at that point, but with tax values not rising like they have in the past, the school is bumped back, Warner said.
The district’s bond debt is $28.3 million. With the $103,000 borrowed and accrued interest of $1.4 million, the new debt total will be $29.88 million.