St. Joseph School District Authorizes Up to $8 Million in Short-Term Borrowing

ST. JOSEPH, Mo. — The St. Joseph Board of Education has authorized the district to borrow up to $8 million this fall as it waits for a large portion of its annual property tax revenue to arrive.

Board members unanimously approved a tax anticipation note resolution during Monday’s meeting, allowing the district to secure short-term financing to cover operating expenses primarily during October and November.

Tax anticipation notes, commonly called TANs, allow government entities and school districts to borrow against tax revenue they expect to receive later in the year. In St. Joseph’s case, much of the district’s local property tax revenue is received in December and January, creating a temporary cash-flow gap earlier in the school year.

Local revenue accounts for approximately 55% of the district’s total revenue. Once received, those funds are invested to generate interest and withdrawn as needed to pay district expenses.

Board member Mike Moore questioned how much the district expects to spend in interest on this year’s borrowing. District officials said the interest expense is expected to remain below $80,000.

The district hopes increased reserves will eventually eliminate the need for the annual short-term loan.

Board member Cassandra Veale said the district expects to continue using tax anticipation notes until its reserve balance reaches approximately 14% of expenditures.

Current board policy calls for reserves equal to 20% of expenditures, but district officials have discussed 14% as an intermediate target that could provide enough available cash to cover expenses during the months before property tax revenue arrives.

Board Vice President Jacob McMillian encouraged the district to formally include the 14% reserve target in its Continuous School Improvement Plan, or CSIP.

Reaching that level would give the district a larger financial cushion and could allow it to stop relying on short-term borrowing each fall to bridge the gap between expenses and incoming tax revenue.