NCSD board approves use of inter-fund loans

With a $6 million payment to certified staff looming in June, the Newton Community School District Board of Education approved the use of inter-fund loans for district administrators during its meeting Monday night. Transferring money from one account to another will help the district cover its costs over the summer while waiting to receive state funding in September, Gayle Isaac, the district’s director of business services said.

NCSD Superintendent Bob Callaghan said he’s not sure if the district will need to borrow from itself. The board made a similar move last year to allow administrators to tap into the fund balance to cover summer expenses, but there wasn’t a need for the money.

“We may not have to borrow any money this summer, we may be able to arrange our payments,” Callaghan said. “We did the same thing last year and we were able to make it (without borrowing money])”

The district has a balance of $1.2 million in its fund balance account. On Friday the superintendent estimated it would cost roughly $1.5 million to keep the district operating during the summer. If needed, Isaac would funnel money out of the district’s SAVE fund, a local option sales tax intended for infrastructure projects, and into the general fund, where the money would be used to pay bills over the summer. A big part of that is the $6 million dollar payment due to the district’s teachers June 1. Under its contract, teachers are paid for all three months of summer June 1.

“We typically need about a million and a half to get us through the summer, and I do not anticipate us having quite that much during the summer to get us through,” Isaac said.

Isaac asked the board to authorize the use of the money Monday because he’s concerned if the district is backed into a financial corner he’ll be forced to call a special board meeting in the middle of the summer to get the clearance he needs to transfer from one account to another.

“I just don’t want to forget and I don’t want anyone else to forget, that we need to borrow and suddenly the bills come up, payroll comes up and we don’t have the money,” Isaac said. “I just want to make sure I’ve got the ability to transfer that money so we can make those payments.”

On Monday, board member Cody Muhs asked Isaac if the board would need to continue to authorize the loans going forward. With school board members moving to set aside additional cash in an attempt to rebuild the fund balance in the future, transferring money from one account to another may no longer be necessary next year. Callaghan said increasing the fund balance has been a priority for the district.

“We think we’ll have to use some of that cash to finalize the budget for next year,” Callaghan said. “We’ve been using that fund balance to balance our budget over the past few years.”

The fund balance is the district’s only source of ready cash. It’s where administrators turn to cover unexpected expenses, including last fall when the board voted to approve hiring additional special education teaching associates. Those moves have left district administrators in a financial pinch as they work to balance their budget in the face of lower than expected Supplemental State Aid, or SSA. Legislators at the statehouse approved a one percent increase in SSA this year, lower than administrators had hoped for.

This summer will be Isaac’s last with the district. On Monday he announced to the board that he plans to retire this year.

Contact David Dolmage at
641-792-3121 ext. 6532 or ddolmage@newtondailynews.com