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Ypsilanti community members expressed several frustrations toward plans to close schools in Ypsilanti School District at Tuesday evening’s community forum at...read more
Photo by Jim Cavanaugh
The Ypsilanti Public Schools' Board of Education approved borrowing $11 million to cover payroll and other expenses until they receive state allocations in October.
Money to cover cash flow problem
Jun. 23, 2009 · 1:06 p.m.
To ensure that the district’s cash flow needs are being met, the Ypsilanti Board of Education voted 5-0 Monday night to borrow $11 million.
The district intends to use the money to cover payroll and other expenses until it receives state allocations in October, after the state’s fiscal year begins.
The district faces an approximately $4 million deficit, which is complicated by the fact that the state has yet to pass an education aid bill for the 2009-2010 school year. According to a report prepared by acting Chief Financial Officer Kelli Glenn, the Michigan Department of Education has warned districts of a potential per pupil cut for the next academic year.
According to Superintendent James Hawkins, the district regularly borrows money, but it has increased the amount due to the economic downturn and cuts in state funding during the last several years. He added that other districts have large equity funds they are able to draw on, however, Ypsilanti is not one of those districts.
“We don’t have any substantial fund equity,” Hawkins said.
He added that although the district has yet to find out exactly how much money it will receive from the state for the 2009-2010 school year, he does not expect a need to borrow more money.
The district borrowed $5.6 million last year. Part of this year’s sum of $11 million will be used to cover the previous year’s loan.
“Last year we were in a similar position,” Board President David Bates said. “The school district doesn’t always receive money on schedule.”
Bates acknowledged the fact that continuing to borrow money to pay off debts could be detrimental to the financial health of the district.
“You can’t keep doubling what you’re going to borrow and not get yourself into trouble,” Bates said.
According to the resolution authorizing the loan through the Michigan Municipal Bond Authority, the district is required appropriate a sufficient amount of pledged state aid to repay the principal and interest on the loan.
Trustee Edward Jackson said he understood the need to cover the payments on the loans the district took out last year, but indicated that he’d like to see YPS on a better financial footing.
“Hopefully in the future there will be a much better outcome and create a more positive future for us,” Jackson said.
Trustees Andrew Fanta and Sarah Devaney were absent from Monday night’s proceedings.
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