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Capo Schools Go on Borrowing Binge

To fix cash-flow problems, the school board eyes another short-term loan, bringing Capo Unified's total borrowing this year to $100 million.

Capo Schools Go on Borrowing Binge

The is about to borrow more money than ever to make ends meet through the end of the school year.

On Monday, the Board of Trustees will consider taking out a short-term loan of $25 million. That's on top of a $75-million loan taken in July, after the board authorized .

Half of the first bridge loan is due to be repaid this month, and half in April. Property-tax revenues will cover those payments. But by June,  will leave the district short another $21.3 million, creating the need for a second loan, according to a staff report.

The combined $100 million in loans represents 27 percent of the district’s $372-million budget.

“The district has never borrowed that much,” said CUSD spokesman Marcus Walton.

The short-term bridge loans are offered through a financial vehicle available to school districts called Tax and Revenue Anticipation Notes (or TRANs). It pools together other cash-strapped school districts, community college districts and county offices of education to get better terms for the loans.

Capistrano Unified has used TRANs regularly because it relies on property taxes as its primary source of income, and the payouts mostly arrive twice a year, in December and April, according to a staff report.

In addition to cash-flow issues created by the normal ebb and flow of property taxes, the state in recent years has routinely delayed payment to local school districts, the staff report says. For example, in the 2011-12 state budget, $2.1 billion owed to school districts this year won't be paid until the next fiscal year.

“This latest deferral brings the total amount of deferred payments the state owes to all school districts from February through June to over $8.3 billion,” the staff report states.

“This means approximately 40 percent of the total state-apportionment payments the district should have received before June 30 will now not be paid by the state until after the start of the next fiscal year,” the report says.

Staff cannot yet estimate the cost of borrowing the funds, paying interest and the cost of issuing the TRANs, the report states. 

The trustees meet at 7 p.m. Monday at the district headquarters, 33122 Valle Road in San Juan Capistrano.

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