Altoona Area School District authorizes up to $40 million short-term borrowing amid state budget impasse

The Altoona Area School District board on Monday authorized administrators to seek a short-term borrowing agreement allowing the district to borrow up to $40,000,000 to maintain payroll and daily operations if state or federal education funding is delayed.

District staff said the borrowing would function like a line of credit and be used only if state or federal funds remain unpaid. “The interest rates we’re looking at right now are approximately 3.5% from one of the larger lending institutions in the area,” a district staff member said, adding that other offers were in the “low fives.”

Administrators told the board the authorization is a precaution to remain operational if a budget impasse continues past December. One board member said the district expects to be able to meet obligations through December and estimated the district might need to borrow about $10,000,000 a month beginning in January if the impasse persists.

Board discussion included concern about interest costs and lost investment income. A board member noted the district has already experienced investment losses and staff said, by one count, schools statewide have generated approximately $50,000,000 in additional revenue from undisbursed funds that have accrued interest to lenders rather than to districts.

The motion to approve the payments, financial reports and authorization to enter the borrowing agreement (items 5a–c on the agenda) passed on a voice vote. The board did not record a roll-call tally in the public record during the meeting.

Next steps: administration is authorized to negotiate and enter short-term borrowing agreements under the parameters discussed; any actual borrowing amount and specific loan documents would be reported to the board when executed.