Mehlville weighs $3 million payroll loan
The Mehlville School District is $3 million short and does not have enough money to cover its end-of-September payroll, according to Superintendent Tim Ricker.
Mehlville Board of Education members were scheduled to meet Monday — after the Call went to press — in a special session to discuss applying for a loan at Midwest BankCentre so the district can pay its employees at the end of the month.
More than 80 percent of Mehlville's revenue comes from local taxes. However, the district is waiting on a live payment from the state with the district's tax withholdings — but those funds will not be available until November.
It is not uncommon for Missouri school districts to have to wait for the state to release its withholdings, Board of Education President Cindy Christopher said.
Mehlville was in the same situation last September, but a program was available to aid the district.
During the past few years, Ricker said Mehlville has developed cash-flow strategies and participated in an advance funding program through the Missouri Health and Educational Facilities Authority that enables school districts to borrow money from the state for tax-flow purposes until taxes become available.
This year at least $7,500,000 will be available to Mehlville, according to the district's accounting department. However, funds for the advance funding program will not be available until Oct. 9 and the district needs the money now, Ricker said.
"With our withholdings this year, this has pushed our cash-flow needs sooner than we thought," he said.
The district needs to borrow $3 million from Midwest BankCentre to cover the Sept. 26 payroll, Ricker said.
If board members support a resolution that would allow the district to borrow the money, Midwest BankCentre will charge the district a 4.5 percent interest rate and Mehlville would have up to 90 days after Sept. 24 to pay back the $3 million.
On Oct. 9, the district would repay the loan with funds it would receive from the advance funding program. Interest on the Midwest BankCentre loan would total about $5,625, according to the district's accounting department.
"This is all happening because we literally don't have enough reserves to cover it," Ricker said. "If we had 10 to 14 percent in reserves, we probably could squeak by.''