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.”
