SHARON SCHOOLS Lack of budget means district must borrow

The district could be facing a $3.5 million deficit.
By HAROLD GWIN
VINDICATOR SHARON BUREAU
SHARON, Pa. -- The Sharon City School District will have to borrow up to $4.5 million to keep its doors open because the state has yet to pass a 2003-04 budget.
James Wolf, district business manager, has been warning the school board for the last two months that the district would run out of money this month because the state failed to make its $1.6 million subsidy payment at the end of August and isn't expected to make a second payment of the same amount next week.
Sharon gets its $6.4 million in state subsidy funds in four equal installments during the school year. The last two are due in late December and February.
The Legislature and the governor remain at odds over a budget that, by law, was to be in place July 1.
Many in the same boat
Wolf told the school board in a work session Wednesday that more than 120 of Pennsylvania's 501 public school districts have already been forced to borrow money or are planning to do so in the near future.
Some have even said they will close their doors if the state doesn't come through with their subsidies, he said.
School Director Rick Mancino said that may not be a bad idea.
If all of the school districts banded together and threatened to close down when they run out of money, the Legislature will be forced to act, he said.
It's not fair to ask taxpayers to pick up the interest costs of borrowing money that the state should be providing, he said.
School Director Kathy Hall agreed, asking how many businesses continue to operate when they run out of money.
School Director Lora Adams-King said, however, that Sharon has no choice but to borrow to stay open.
"We have contracts we have to fulfill. We have to borrow," she said.
Covering interest
Donna DeBonis, superintendent, said the state has indicated it will cover the interest costs for districts forced to borrow money to stay open.
Wolf said Sharon will be $14,700 in deficit at the end of this month and that red ink will grow to more than $1.4 million by the end of November and more than $2.7 million by the end of December. It could reach nearly $3.5 million by the end of January, he said.
Wolf told the board he has already asked five banks for proposals on a Tax and Revenue Anticipation Note of $4.5 million in which the district borrows money against future tax and state subsidy receipts.
The board agreed to meet in special session at 6:30 p.m. Tuesday to accept a loan offer.
Wolf said Sharon won't take the money in a lump sum but will only draw it down as needed.
He said Sharon doesn't have the reserves to keep running without the loan.
The district's capital improvement account is down to about $160,000 and the capital reserve account has only between $400,000 and $500,000, he said.
gwin@vindy.com