The Atlanta school district could borrow up to $120 million to cover expenses because of delays in Fulton County tax collections.
This would be the fourth year in a row that the school system has had to take out a short-term loan as it waits for local property tax money to start pouring in.
Local taxes make up the bulk of the district’s more than $860 million general fund budget. The Fulton County tax commissioner’s office states property tax bills are normally mailed in July, but in recent years, bills have been delayed.
APS officials said delays create a cash-flow problem during late summer and autumn since the district counts on local tax money to pay bills and employees. The district needs about $25 million to make each payroll, for example.
“Just like anybody else, if you received your entire paycheck in one month for the year it would mean that you would have to really be tight in your spending,” said Lisa Bracken, the school district’s chief financial officer.
The district estimates it could be charged up to $875,000 in interest to take out a $120 million loan, though Bracken said borrowing that amount is a “worst case scenario.”
She said if property tax bills are mailed by Aug. 15, the district likely would only need to borrow about $70 million. That would cost the district $255,000 to $510,000 in interest.
APS paid about $968,000 in interest and fees for the three loans, called tax anticipation notes, it took out the previous three years.
“I choke up every time I see a [tax anticipation note], and we have to pay interest,” Superintendent Meria Carstarphen told board members Monday.
A number of factors contributed to the timing of this year’s tax bills, including the need to calculate a number of new homestead exemptions that give some property owners a tax break.
“We recognize that many local governments choose to issue tax anticipation notes in order to manage cash flow. Fulton County has worked closely with our partner taxing jurisdictions throughout the tax cycle and have kept them informed about key milestones in the process,” said a written statement from county spokesperson Jessica Corbitt.
The school board is expected to vote on final loan authorization Monday. The loan would need to be repaid by Dec. 31.
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