Loan sought to cover budget shortfall

Published 5:00 am Thursday, August 27, 2009

The Brookhaven School District is borrowing money to pay forborrowed money.

School board members voted Tuesday night to take out a $612,670loan to plug a shortfall in the district’s local fund, the pot fromwhich district maintenance and debt service funds are expended.Superintendent Lea Barrett said the loan was necessary to bring thefund up to full strength and continue paying back bonds.

“Occasionally, because of the economy, the millage just does notgenerate what the taxing authority said it would,” she said. “Whenyou have a bill, you have to pay a bill.”

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The district’s local fund, which is funded by tax dollarscollected by the city of Brookhaven, came in this year atapproximately $8.6 million, 7 percent short of the projected $9.2million. The district’s loan has an interest rate of 4.79 percent,and will have to be paid back in three years.

The shortfall was not expected to require millage rates to beraised, however, and the board approved a measure to not ask for arate increase.

Aside from debt services, the district maintenance fund alsopays for essential services like utilities, school buses andcustodial staff.

“I’m conservative fiscally, and I never like having to borrowmoney,” Barrett said. “But we have people to pay, lights to turn onand buses to run.”

Board attorney Bob Allen said school boards are authorized totake out such shortfall loans to cover up to 25 percent of abudget. The district’s loan was only 7 percent.

“The statute allows you to borrow up to 25 percent of thebudget, but I always figured if your shortfall was 25 percent, youneed to sell the schools or start having wrestling matches orsomething,” he said.