Moses Lake School Board to Decide on Interfund Loan Due to Cash Shortage
The Moses Lake School District is facing a $2 million deficit due to financial uncertainties and a significant budget cutback. The shortfall was initially thought to be $20 million, attributed to enrollment fluctuations and accounting mistakes. The School Board recently approved an interfund loan to address the financial challenges. The Moses Lake School District is grappling with a $2 million deficit stemming from financial uncertainties and a notable budget reduction. Originally believed to be $20 million, the gap was due to enrollment variations and accounting errors. To tackle these financial hurdles, the School Board recently sanctioned an interfund loan.
(The Center Square) – Moses Lake School District is anticipating a $2 million shortfall at the end of the month as it attempts to better understand its financial situation amid a larger reduction.
The district announced the budget reduction following the repeated failure of its Maintenance and Operations Levy in February and April. However, after a closer look at the district’s finances earlier this month, enrollment rates and accounting errors inflated that total to $20 million.
Shortly after, MLSD’s School Board approved a decision to reduce personnel by around 100 people, the first round of reductions as the district attempts to balance its books. Still, while staffing accounts for most of the budget, the decision only saved MLSD $13 million.
“I know that this problem was created over a long period,” said Carol Lewis, MLSD’s assistant superintendent. “So we, right here, didn’t create the problem, but it is our problem to solve.”
During Friday’s study session, Linda McKay, deputy superintendent of North Central Education Services District, said the priority now is ensuring that MLSD has enough cash to sustain its approximately $11 million monthly payroll, which it currently lacks.
Trisha Schock, NCESD executive director of administrative services, attributed the lapse to discrepancies in enrollment, which generated less funding from the state than expected.
While monthly payroll totals approximately $11 million, Schock said MLSD only had $3.4 million available at the end of April and $7.4 million from state apportionment for May, leaving the district roughly $2.2 million short at the end of the month.
“We do not have enough cash to cover [the approved payroll] without an interfund loan from capital projects,” she said.
Interfund loans involve borrowing money from oneself and promising to repay that amount later. Schock said MLSD could use this strategy to cover payroll for May while relying on an additional interest rate to offset any revenue that would have come from capital investment.
The school board will vote on Thursday to decide whether or not to use an inter-fund to cover this month’s payroll before the end of May.
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