Officials at the Pine Strawberry School feared the worst when the county treasurer reported that the school had not only drained its bank accounts, but also used its $50,000 line of credit.
The district had expected property taxes to replenish its bank accounts this month. However, the computer glitch that delayed the mailing of property tax notices forced the county to extend the payment deadline to Dec. 1, which delayed the expected revenue.
“The reality was we were out of money,” said district Business Manager Mary Jo Licavoli. “We had used all our cash and our line of credit.”
“I thought it was a sign of the times,” said Pine Strawberry Superintendent Mike Clark. But, “it wasn’t a sign of the times, it was a sign of a tax glitch.” The district entered this school year with $378,000.
“The worst-case scenario is schools actually do close their doors,” Licavoli said. Pine Strawberry, however, will not succumb to that fate.
School districts are not permitted to have checking accounts nor savings accounts for the operations budget, and money can only be carried over from specific funds, Licavoli said.
“I can keep track of expenses and budgeting,” Licavoli said. But cash and revenue streams are not reported back instantaneously. “Right now, we’re covered.”
The school had money in reserves, and Licavoli moved those funds funds around to replenish its coffers and pay the $50,000 debt. The district now has $123,000 in available cash, plus another $28,000 in soft funds — non-tax derived money — and a new, $150,000 line of credit.
The county used its own line of credit to lend the school money until the new line could be extended to them, said county treasurer Debi Savage.
Licavoli said there had been rumors that the state would grab the soft funds to pay its bills. “Well now that’s not an issue,” she said. The district used that money to forestall economic disaster, “just about leaving us penniless.”
Schools send vouchers for payroll and other expenses to the county schools office, but the county treasurer’s office ultimately disperses money.
Schools can usually borrow up to 45 percent of their maintenance and operations budgets. However, banks aren’t required to approve credit lines that high, and Savage noted the current credit crunch could make that possibility less likely.
Usually, accounts without money mean bounced checks. “But we knew the money was going to be here,” Savage said.
The computer glitch was related to new appraisal system software that Gila County, along with four other counties, jointly purchased to save money.
Problems related to the new format delayed mailings.
One person was overseeing the system for five counties, county officials said previously.
Property tax money is already coming in, though 40 percent of it — homeowners who add taxes onto mortgage payments — won’t arrive until Oct. 31.
As the county receives money, it immediately disperses it to school and fire districts, along with other tax-dollar-reliant entities, Savage said.
The county has said it will pay any interest accrued by entities who borrow money because the property tax payments were delayed.
The Payson Unified School District also expects to borrow money to pay the bills.
The district has two funding sources it can tap — an advance on state aid and credit through the treasurer’s office, said business manager Bobette Tomerlin.
Tomerlin said she expects to ask the state for an advance this month, but hasn’t yet determined how much the district will fall short.
“The county schools office did request us to delay payments that were not absolutely necessary,” Tomerlin said. “However, we have a responsibility to our vendors to make timely payments. We’re following through on that.”
Officials say the situation isn’t unusual. “This has happened before,” said PUSD Superintendent Casey O’Brien. “It’s not an issue to be concerned about.”