Savannah-Chatham County Public School System

SCCPSS Budget Update – Use of Tax Anticipation Note

Published on: 10/5/2018


Each year, the Savannah-Chatham County Public School System manages a budget that comprises of state, local, and federal funds for the delivery of high quality educational services to almost 38,000 students each day.  The management of budget resources is a key component for the successful operation of the school district and there are many factors that contribute to the financial decisions of the District.

 

Earlier in the year, during the Budget adoption cycle (January-June), factors that could influence budgeting decisions were discussed.  These budget presentations take place as regular updates provided to the Board of Public Education during public meetings of the Board.  A key topic throughout the budget adoption process included a review of conditions that had the potential to create cash flow concerns for the school district.  As with any budget cycle, projections change and information is updated as definitive facts are received.  During these discussions, a member of the School Board suggested a review of the property tax collection process and the reasons why anticipated projections were lower than expected.  The inquiry was received during a question and answers dialogue where clarification on the timing and process for tax collections was discussed.  The District has a strong working relationship with the Chatham County Tax Commissioner’s Office and relies closely on this agency for tax revenue information.  The timing of tax collections is a critical component that serves as valued information from an operational and planning standpoint for SCCPSS.

 

In subsequent meetings and prior to the adoption of the FY19 Budget, SCCPSS Chief Financial Officer, Larry Jackson was able to clarify that early predictions were now tracking in a positive direction and that the FY19 Budget was expected to be on target with revenues and tax collections. 

 

Currently, tax collections are higher when compared to prior years.  The District’s use of a Tax Anticipation Note should not be confused with the current level of tax revenues. 

 

A Tax Anticipation Note is a commonly used process for school districts to bridge projected short-term gaps in finances and cover costs while awaiting receipt of expected tax revenues.  Based on current cash flow projections showing a negative cash balance for October and November, the use of a T.A.N. was implemented for the first time since 2009.  The projected negative cash balance is the result of two primary factors: use of the general fund balance in recent years and increased expenditures – largely due to increases in staff and compensation.  The general fund balance at this time is not robust enough to continue to fund district operations until the property tax payments are received later this fall.

 

At the October 3, 2018 meeting of the Savannah-Chatham County Board of Education, District staff requested the use of a Tax Anticipation Notice (or T.A.N.) in the amount of $21 million, which was subsequently approved by the Board.

 

SCCPSS staff worked with the district’s advisors to issue a Tax Anticipation Note (TAN) for $21 million, a short-term loan which will be repaid on or before December 31, 2018. The stated interest rate is 2.79%.

 

Chief Financial Officer, Larry Jackson, assures that the projected revenues in the FY19 Budget are in line with expenditures.  “We remain fully committed to our work as good stewards of the funds received for the operation of the school system,” he said.  “The use of the Tax Anticipation Note will completely close the current funding gap and provide the critical resources to maintain operations while all revenues are received.  I would like to thank the Tax Commissioner’s office for their support and continued efforts to seek timely and advanced collections on behalf of the school district.”

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