For first time in years, Perham schools won't have to borrow against aid
For the first time in over a decade, the Perham-Dent School District will not have to borrow against anticipated government aid.
At a school board meeting July 18, business manager Kristi Werner said she has been working on a cash analysis with financial advisor company MN Trust/PMA Financial, which has helped the district determine whether or not it would need to borrow like in years past.
The analysis showed the cash flow account would not need borrowed funds.
In a typical year, the school district borrows money in the fall to keep cash flow sufficient until revenue from the state is received. For example, in September 2011, the school borrowed $2.8 million. That amount, plus $31,000 in interest, will be paid back this August. And typically, the school would borrow against the next year's anticipated aid in order to pay back last year's amount.
This has been the pattern for the last decade, and it's not unique to the Perham district.
The current payment shift in schools across Minnesota is 70-30, meaning 70 percent of the amount owed by the state is paid one year, while the remaining 30 percent is paid the next. This helps ensure that the state doesn't overpay school districts.
In the meantime, however, school districts still have to pay 100 percent of their bills; to help meet their cash needs until that other 30 percent comes in, many districts sell bonds that go against aid anticipation.
This year, the Perham district is expecting larger payments from the state in August, which will pay back last year's aid anticipation. The district has also seen a cushion grow in the cash flow account over the years, which will help meet the cash needs of the district. And though all those things have a part, Werner said closer monitoring of revenues and expenses was the main reason they will not have to borrow this year.
The cash flow will be reevaluated on a regular basis. The district can partake in aid anticipation borrowing later in the year, if necessary. If that happens, the district will pay less in interest overall, because the length of borrowing will be shorter.
In other news at the meeting, Activities Director Fred Sailer requested that some remaining funds gifted to the district by the Wardale family be used for an expansion to the high school auditorium.
Sailer said a large entry way with a coatroom, public restrooms, ticket area and concessions with possible future expansions around the building, would be the beginning of a process to modernize the auditorium.
The Wardale family recently donated $187,000 to be used on Perham school building improvements. Some of the Wardale funds have already been set aside to help upgrade the high school media center.
The 549 Foundation members make decisions regarding the Wardale funds, so no decisions were made during the school board meeting.
A special meeting was scheduled for August 1 at 4 p.m. at the high school to focus on enrollment numbers, especially in kindergarten and first grade, where enrollment is expected to be between 80 and 90 students.
If all expected kids enroll, possible additional sessions of kindergarten and first grade will be discussed. Currently, both grades are scheduled to have four sessions.