School district considers a line of credit on Owatonna

OWATONNA — The delay of state funding has school districts all over Minnesota worried. Many have just enough to pay the bills until May 30, when the state government said it would repay the funds that have been withheld from schools. But what if that doesn’t happen?

In case the funds are not repaid, or in case the funds put away in savings are not enough, the Owatonna school board is taking steps to prepare.

In a last minute addition to the budget, the school board was presented with a request to authorize opening a line of credit for the school district. The idea is to get a $500,000 line of credit through US Bank in case of emergencies.

“We have to make sure we can pay the bills,” said Owatonna Superintendent Tom Tapper. “This is the way districts are going throughout the state.”

Tom Sager, the director of operations and finance for the district, told the board how the loan would work.

Officials took a look at district finances and determined they would be cutting it very close if they continued operations without an emergency fund. That is exactly what the line of credit would be, said Sager, emergency funds. The only way the money would be touched is if the unexpected happened. The school would then be able to use the funds and pay them back within 45 days. If the state aid payment of about $3,140,255 million is paid by the May 30 deadline, then the line of credit would go untouched.

The rate of interest available is at one percent over the optimal rate. US Bank was chosen because of their government services department’s good past relationship with the school district.

“When we first expected we may have to do this, we went to an institution we have a relationship with,” Sager said. “They’ve outlined competitive rates for us with the standard terms and conditions.”

Board member Samona Grubish asked if the amount was enough. She brought up the possibility of the state pushing back any financial resources.

Sager explained that if that happened, the school would have to look into different, longer lasting options.

The request to open a line of credit was approved by the school board, by a roll call vote. Corey Mensink abstained, and Vilnis Giga and Don McCann were not present.

In other news, the school board heard a presentation about some new things happening at the junior high school.

The school is going into its last section of the reinstalled trimester system. The school has tried going back to the trimester system in order to cut down on expenses and the number of study halls for students. The trimesters also give some of the classes more instruction time and the format has turned some courses into year-long programs.

So far, officials said, there doesn’t seem to be much effect on teaching or learning.

“The trimester system is meant to minimize the amount of time students spend in guided study hall and give as much exposure as possible to exploratory classes,” said Kyle DeKam, OJHS principal.

The junior high is also finishing up its second year on the TeamUp grant. The TeamUp grant, which stands for Teaching English language learners — Action Model to Unite Professionals, has been targeting students whose second language is English. The grant has provided teachers with a library of resources to use to better teach ELL to students.

“Though the students may be able to talk just fine, they may not be able to do everything they’re expected to do in class,” said Heather Bae, an OJHS teacher on the TeamUp committee.

Through the program, the committee has been able to connect with the parents, help their students learn at home, explain some of the different cultures in the school to the entire student body and show teachers in the school what they can expect for their ELL students. In fact, they’ve been holding classes in order for teachers to learn some methods of making education easier for students learning English as their second language.

The district will be looking for more grant money to keep TeamUp going for a third year.

Briana Gehring can be reached at 444-2378.

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Member Opinions: By: secretsquirrel on 3/9/10 Hey brother... can ya spare a dime? By: TheMole on 3/9/10 maybe the education union can spare a dime-they spend lots of money on telling us how important their jobs are and why they need more money to do it. There jobs are VERY important but I question their need for more money. By: commoncitizen on 3/9/10 Seems like the million dollar pay raise for the teachers would have covered this easily. How about if the union pays the interest? By: cialunatic on 3/9/10 The fact that interest paid will leave less money for education, I wonder where the money will come from to make it up? By: j9 on 3/9/10 j9 what is wrong with lay offs ,with this i do not meen the teachers most places around minnesota are laying off office people . By: katokid88 on 3/9/10 so is this a similar situation? hypothetically, say i could not afford to pay my bills, rent, electric, car pmt..etc.. and i was waiting and hoping i would get a huge sum of money to help with that... ie. a tax refund, or something... would it be smart of me to take out a loan, or a line of credit, or charge my bills to a credit card, not knowing for sure if im gonna come into some money to cover it? once i max out the card, or use the loan, i will be back in the same situation, with MORE debt to pay back. this would not be a smart thing to do. i dont know if im reading the schools situation correctly, but it sounds like this is what they are doing. wouldnt they just be putting theirselves into more debt? and isnt this dangerous since theyre just gambling on the fact that they might get this money to help them out... or pay back whatever credit theyre in need of? sounds like only a temporary solution that could only hurt them more in the end. By: owatonnalive on 3/9/10 I really only have one recommendation for the people that have commented to this point. Please get informed before spewing your misinformed opinions to the rest of the world. I should also state that I am not one to stick up for any government function, but this is not an issue of the teacher salaries or anything that the district has or is doing incorrectly. This is about robbing Peter to pay Paul. The State of MN needs additional funds to pay the bills. The amount of income tax that is usually generated has gone down significantly with so many people out of jobs and not paying taxes to the state. The State of MN wants to delay payments to those school districts that are doing the right thing by having money in their reserves (Owatonna happens to be one of those). Like I mentioned in the first paragraph, get out there and get informed. Don't expect that the Owatonna Peoples Press is going to do that all for you. By: Are_you_serious on 3/9/10 Our govenor sucks and he should pay for it! By: MNBear on 3/10/10 owatonnalive - you are only half right, and please don't label others who don't agree with you as "uninformed." Owatonna (and Faribault, Medford, and lots of other schools) is claiming poverty - that they won't even have enough money to pay the bills. This is not a new situation. The economy has been in the tank for a couple of years now, and they have known with 100% certainty that their funding was going to be cut. Yet, what happened just a couple of months ago? Union contracts were signed giving raises to teachers. Administrators still have six-figure salaries. Why? Personnel costs are about 3/4 of all expenses, yet they give RAISES? Even a 2-3% raise adds up to millions for a district. Still, no talk of CUTS, just give us more tax money. By: whatthe on 3/10/10 So the state should rob Peter to pay Paul, MNBear? You always come back with the teacher's and admin make too much, but what about Gov Poopoo and the rest of our lawmakers? Why don't you get mad at them? Oh...that's right, educators are the downfall of society, right? Have a good day, MNBear. The clouds will be clearing at some point soon. Hope when it does, it brightens your day.
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