Seneca Valley Approves Up to $5 Million Line of Credit

At Monday’s meeting, Seneca Valley School board members approved taking out a tax anticipation note of up to $5 million to cover costs for the district throughout the summer months.

Business manager Lynn Burtner said the loan though was a precautionary measure and may not be used unless there is a shortfall in estimated revenues, or there is an emergency situation. This is the first time the district has taken out a line of credit in recent years, she said.

Previously, the district used its large cash reserve to cover July and August operations until the property tax revenues started flowing again to district coffers in September.

School board member Eric DiTulliothe district spent $10 million of the $17 million it had reserved in the 2007-2008 school year over the last four years.

Seneca Valley did not raise taxes during the 2008-09 or 2009-10 school years. In a note to residents on the district website that addresses the 2011-12 budget, Superintendent Dr. Donald Tylinski said money was drawn from the fund to balance the district budget in those years.

The state Board of Education suggests school boards set aside about 8 percent of their total budgets in reserve.

Burtner said the district’s current fund balance of $8 million will be drained once a $5.7 million debt payment due in July and payroll costs are factored in.

The interest rate on the loan would depend on how much is borrowed and how quickly it is paid back, Burtner said. The annual interest rate is 1.95 percent.

She said any money taken out would be on a short-term basis and paid back in the fall.

“We catch up very, very quickly in the month of September,” she said.

Along with board member James Welsh, DiTullio voted against taking out the line of credit.

DiTullio added that he was disturbed the loan hadn’t been brought up at earlier budget discussions. In May, officials . The $94.5 million spending plan calls for a 5.6 mill increase in real estate taxes and the curtailment of a half-dozen district programs. Altogether, the move will affect 16 full-time teaching positions and one part-time position.

Burtner said she only recently discovered the need for a loan after she began to map out the district’s week-to-week cash flow.

“If everything goes perfectly we may not need to touch it,” she said. “If it did not, there was no contingency in place. “