HATTIESBURG, MS (WDAM) - The Hattiesburg Public School District is starting to assess its funding options for the next fiscal year.
"We're starting to examine whether we're going to do a another tax anticipation note (TAN), and if so, how much because we've currently borrowed $7 million, which, obviously, is going to have to be paid back on or before June 30," said Greg Ladner, interim superintendent for the district. "Then there may be some other options that the board will make consideration of. I really do not think it's fair for me to be going out the door and set the future, so most certainly, I will give options. I will not give recommendations to that. They will need to choose among the options that are given to them, but I will not be putting forth a particular recommendation on that."
Sheryle Coaker, interim chief financial officer for Hattiesburg Public Schools, said tax anticipation notes are common in many school districts.
"The issuance of a TAN is not necessarily a bad thing," Coaker said. "There are many districts that do that because it does start the year giving you some cash flow availability. Once you receive those tax dollars in January, February and March, then you're able to pay that (TAN) back with those. You borrow it based on the fact that you're going to pay it back with the monies that you collect."
However, she said HPSD continues to borrow more money than it actually receives in tax dollars, which means the district is using its general fund to pay the difference.
"The fact that the TAN is growing is more of a concern than actually issuing the TAN," Coaker said. "In a school district, you're going to spend 60 to 70 percent of your expenditures by December and not recoup a lot of revenues until after that. Well in a district where you've got a lot of federal funding, remember a federal year starts Oct. 1, we're a little bit behind. We start July first receiving some of those revenues, and so something has to float that until we start receiving those revenues. I think what your concern would be in this case is that the TAN is growing, so that means there's a reduction is the fund balance. Normally, you use your fund balance for that purpose (to float a district budget at the beginning of the school year). Whatever you end the year with, that's what you start the year and use for cash flow purposes."
Right now, Ladner said he sees three options for the district's future funding.
"When you look at the options, it's either pay the amount on June 30, and then because of your cash flow issues, you're going to have to turn around and get another one and then another one, another one and another one for years to come," Ladner said. "So that's one option. Another option to maybe look at is going ahead and turning the current $7 million you owe into a longer term payoff rather, and that would avoid you having to go get, hopefully, an annual TAN, tax anticipation note, every year like we have been doing in our past. The only other, third, viable option that we've been able to discover at this time unless money starts falling out of the sky is the state take over."
While Ladner said state take over of the district is possible, he does not think it is likely.
"The state does not want to come take over Hattiesburg," Ladner said. "They do not want that financial bearing nor the responsibilities. They would rather see Hattiesburg work out their own issues, the same ones that they got themselves into, they would like to see Hattiesburg work themselves out of. I don't want to speak out of turn for the state, but, you know, they have their own funding issues. I think they've taken a pretty good hit going into this next school year and being inadequately funded in certain areas."
Coaker said the district will have to carefully monitor its financial decisions through June 30, 2016, and well into the next few years.
"We'll continue to make decisions because it's not there yet," Coaker said. "It's a long process. Didn't just happen in a day, in a year."