Sunday, February 5, 2023

Greenville Public Schools borrow to cover December payroll

Missed state aid deadline called a one-time hiccup

GREENVILLE — Members of the Greenville Public Schools Board of Education gathered or a special meeting Wednesday evening to ensure payroll throughout the district would not be compromised entering into December.

Greenville Public Schools Board of Education Trustee Rocky Hansen, left, and Secretary Ron Billmeier look over information at a special meeting on Wednesday. During the meeting, the board voted unanimously to borrow $1.5 million through a state aid note to ensure payroll for throughout the district would be met into December. — DN Photo | Cory Smith

A unanimous vote was cast to borrow $1.5 million through a State Aid Operating Note “to pay current operating expenses” for the 2022-2023 fiscal year.

The State Aid Note program is a streamlined loan program to finance short-term operational cash flow needs for traditional public schools.

While the board previously borrowed funds in October — as it does every year due to the timing of when state-aid payments are received — according to Finance Director Matt Andres, the additional $1.5 million was needed to avoid a shortfall in making payroll payments into December. 

“We do have a little shortfall with the next payroll,” he said. “So there’s a need for another resolution. It’s a similar setup to the annual one we just approved in October, this one just helps us for one payroll (period).” 

Trustee Richelle Lentz asked for clarification as to the reasoning for needing to borrow additional funds. 

“Is it correct that we had a delay in state funding because of the audit?” she asked. 

“Yes,” Andres responded. 

“We don’t have a payroll shortfall, we’re borrowing to ensure that we don’t have a shortfall,” Trustee Michael Huff added. 

Seeking additional clarification on the issue, the Daily News spoke with Andres and Superintendent Wayne Roedel on Thursday for additional details. 

According to Roedel, the district is fiscally sound and there are no budgetary issues; however, during a period of transition in which Andres replaced former finance director Maureen Fleet and Roedel replaced former superintendent Linda Van Houten throughout the months of September and October, an unintended consequence of those exchanges saw more time needed to complete the district’s 2021-2022 fiscal year audit. 

Per state statute, the district’s audit had to be submitted to the state by Nov. 1; however, Roedel said that deadline was “just missed.” 

As a result, the district’s monthly state aid allocation of $3.8 million, which would have been received Nov. 20, was delayed until Dec. 20. 

Roedel said as a result of Andres starting in his position in September, and Roedel himself beginning in October, it took longer than expected to complete the auditing process. 

“I was new, Matt was new and the audit wasn’t completed yet when we came on board,” he said. “We brought our auditor in to go back and recreate the past year and that takes some time, so unfortunately we were not able to get the audit submitted to the state by Nov. 1. As a result of that, our state aid payments were put on hold until the audit could be submitted to the state.”

Roedel described the delay in the audit as a likely “one-time hiccup.”

“The audit taking longer than desired, that was more of a function of new people learning our system and having to recreate things,” he said. “With Matt having to go back a full year and recreate some of the financial maneuverings that were done in the district, it just took extra time.”  

By not receiving the Nov. 20 $3.8 million payment, Roedel said it put the district “about three days short of cash” to be able to make the next payroll period.

“Every two weeks we have about $1.3 million in payroll,” he said. “We were just shy of having enough available to make that payment (without borrowing).” 

Roedel emphasized that the district will still receive its November state-aid allocation in December, with no fines or penalties issued against the school district. 

“This is really for cash-flow purposes,” he said. “By June 30 of next year, when we take a look at our budget, our fund balance is going to be back up there at about $6 million.”

The district’s audit will be presented at the Dec. 12 meeting of the board. 

“The public will find that our 2021-2022 budget really added about $1.6 million to our fund balance,” Roedel said. “The audit, in terms of the numbers, is very favorable.”

Board President Kire Wierda noted that with the district intending to pay the sixth-month note back early, and receiving an interest rate of 2.95%, the board does not expect to pay a significant amount in interest on the loan.

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