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Mehlville OKs payroll loan

Mehlville School District employees should have had no problem cashing their paychecks last week thanks to an emergency loan the district had to apply for to cover its end-of-September payroll.

District officials are waiting for the state to release more than $52 million in funds Mehlville earns from local taxes. The state is not scheduled to release these funds, which comprise about 80 percent of the district's overall budget, until late November or December.

Board of Education members met in a special session Sept. 22 and unanimously approved a resolution that allowed the district to borrow $3 million in the form of tax an-ticipation notes from Midwest BankCentre.

For years, the district has had to wait until late fall or early winter for its local tax revenue, but the district typically participates in an advanced funding program to cover any shortages. The Missouri Health and Educational Facilities Authority program has enabled Mehlville to borrow money from the state for tax-flow purchases until the withholdings are released.

The district utilized the program last September when it faced a similar cash-flow situation, but MOHEFA funds are not available until October this year.

District officials estimate $7.5 million in MOHEFA funds will be available to Mehlville on Oct. 9. However, the district had to take action immediately and did not have enough money in its reserve accounts for the Sept. 26 payroll, according to Su-perintendent Tim Ricker.

Until Oct. 9, the district will use its $3 million to cover payroll expenses and then pay it back with MOHEFA funds as soon as possible, even though the district technically has 90 days to repay the loan. The Midwest BankCentre loan's start date was Sept. 24 with an interest rate of 4.5 percent. The district plans to owe $5,625 in interest, according to Mehlville's accounting department.

Randy Charles, assistant superintendent for finance and the district's chief financial officer, said the cash-flow problem was anticipated and he expects the same problem next year.

"Just to put things into perspective for you, for a school district like ours that relies so heavily on local taxes, we would have needed to carry a balance in our operating fund in the neighborhood of 11.5 percent to avoid the need for those tax anticipation notes," Charles told board members.

"And we'd have to carry a balance in our operating fund of ... 41 percent to avoid needing the advanced funding. That speaks to the relatively low level of operating funds that we maintain in the district,'' he added.

Board Vice President Matthew Chellis asked administrators if $7.5 million would be enough money to cover payroll into November. The district pays $2.6 million in salaries and wages to its employees every two weeks.

Depending on the state's timeliness in delivering the local tax money, Charles said, it is possible all of the MOHEFA funds will be used — causing the district to negotiate another loan with Midwest BankCentre.

"It's all too early, at this point, to know for sure when we will get the money," Charles told the Call. "It all depends on when people pay their taxes ... It is too premature to know if we will need another loan."

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