GARY | The Gary Community School Corp. will need to borrow $28,951,113 in tax anticipation warrants to keep schools afloat financially until property tax revenue is distributed in June and December.
Nikita White, the corporation’s chief financial officer, told the board at a study session that the so-called tax anticipation warrants will come from the Indiana Bond Bank’s 2013 program “to obtain the necessary cash flow.”
More than $3.8 million of that nearly $29 million will go to the district's debt service created by previous borrowings and bond issues.
School Board member Nellie F. Moore said that debt amount is an increase from last year’s totals.
Superintendent Cheryl Pruitt said the budget submitted for 2013-14 already includes that extra payback.
“The collection rate on property taxes is not 100 percent,” White said. “Some other funds will have to fund this (debt-payback increase).”
However, board Vice President Marion R. Williams said he didn’t see many other funds that could contribute to pay the debt amount increase.
White responded that the funds that could be tapped include the general fund, the food service fund, self-insurance accounts and textbook rental fees’ fund.
“We will discuss this in detail (later),” Pruitt said.
An audit performed by the Indiana State Board of Accounts for the period July 1, 2010, to June 30, 2012, found overdrawn fund balances, poor internal controls and poor recordkeeping and took the school district to task.
By the end of 2012, the district had a negative balance in all funds of $12.2 million, according to the report.
In addition, in mid-December the school corporation was issued a judgment bond of $5.7 million and used that money to pay outstanding debts to vendors.
During January the district issued mortgage bonds on two schools and received $18 million to be used for capital improvements, funding the budget and debt service, if necessary.