LORDSTOWN Schools to use low-interest loan to help meet payrolls in July

Good interest rates will keep the costs of repaying the short-term loan low.
By SHERRI L. SHAULIS
VINDICATOR TRUMBULL STAFF
LORDSTOWN -- A short-term, low-interest loan will help the school district cover some bills until collections of real estate taxes start rolling in.
School Treasurer Mark Ferrara said the tax-anticipation loan will help cover payroll in July, which will be paid out three times -- July 3, 17 and 31.
Ferrara told the Financial Planning and Supervision Commission, the board that oversees all financial matters for the district, during Tuesday's meeting that the loan -- for $500,000 -- is basically an advance on an advance.
"It's strictly a cash-flow type loan," he said. "It's not that we really need the money."
Each year, the district receives advances from the county auditor on real estate taxes collected in the village, Ferrara explained.
Traditionally, that revenue starts to come in about the third week of July, but this year the district will need to pay out more than $200,000 alone in salaries before those taxes come in.
Positive balance
The schools, which are in a state-imposed fiscal crisis, will finish this fiscal year at the end of the month with a positive balance between $70,000 and $90,000, Ferrara said.
The loan will be used to pay salary and other bills and give the district a bit of a cushion, he added, until the taxes are collected.
The loan will be paid back by Aug. 31.
"We're just trying to get that cash a little sooner and this is one of the only options we have," Ferrara said.
The school district has used similar loans in the past, but traditionally at higher interest rates, Ferrara continued. One previous loan cost the schools about $8,000 in interest on a higher amount. But now, he said, interest rates are extremely good, which will help keep costs down.
"Maybe we will pay out $2,000 or $3,000 maximum in interest," he said.
slshaulis@vindy.com