Atlanta school system wants to take out a $100 million loan

APS Superintendent Meria Carstarphen in a March file photo. Curtis Compton, ccompton@ajc.com

File this under things that require more discussion.

Charles Stadlander, a candidate for the District 8 at-large seat on the Atlanta Board of Education, called this afternoon to spread word of an interesting entry on the agenda for the Tuesday meeting of the Atlanta city Board of Education.

The Atlanta Public Schools board intends to borrow up to $100 million against anticipated tax revenue expected to roll in the next few months. From the resolution:

WHEREAS, the Governing Body, after an independent investigation of the present and future needs of the School System, has determined that the School System should obtain a temporary loan in the aggregate principal amount of $100,000,000 for the purpose of providing moneys to pay current expenses to be incurred by the School System during calendar year 2017; and

WHEREAS, the most feasible method of obtaining this temporary loan is by the issuance and sale of the School System’s tax anticipation notes for such purpose…

This isn’t unheard of, but it speaks to a cash-flow situation that we weren’t aware of. Stadlander says the situation is a surprise. But Meria Carstarphen, the APS superintendent, said the “awful situation” has been publicly discussed for several weeks, and is the result of tax collection delays from both Fulton and DeKalb counties. Writes Carstarphen:

“It’s not APS’ fault that for the second year in a row Fulton Co. has delayed the tax digest and we still have to make payroll so we have to take out a tax anticipation note until taxes are collected. (Even Fulton Co. took out a TAN  to cover the delay of tax collections for the county.)

“This action been vetted for months. That candidate you highlighted … and does not know the details of the work we have done to close the budget gap related to the tax assessment freeze.”

Pat St. Claire, spokesperson for APS, has sent this statement from Lisa Bracken, chief financial officer for the school system:

“[B]ecause of the assessment freeze and the time it took for the Fulton county assessors’ office to recalculate and resend new notices, we are more than two months behind our typical millage rate process. As September represents a low point in cash flows for most public school districts, this delay required that we seek a tax anticipation note in order to meet expenditure requirements until taxes are received. We anticipate borrowing no more than $100 million.”

We’re told that APS was in the same situation last year, and ended up borrowing $75 million, at a cost of $147,000 or so. Any money from the new loan would have to be paid back by Dec. 31, 2017.

Reader Comments 2

19 comments
bocuvaro
bocuvaro

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TruthReallyHurts
TruthReallyHurts

Horribly lazy "journalism" by Galloway. Look, we know you have to fill column space a specific amount of times each week. Must be a lot of pressure. However, this is a non story that is nothing but click bait, proven by your headline. 

As for the politician, anyone voting for him is an idiot. He's already shown you what he will be about. He is a political opportunist who will try to use the ABOE as a stepping stone for higher office. 

EdGraham
EdGraham

Borrow $100,000,000.  Then raise the taxes on property owners by $100,000,000.  It doesn't matter than they're already paying the highest property taxes in the state and supporting the worst school system in the state and one of the worst in the nation.  Any parent who sends his/her child(ren) to Atlanta Government Schools is guilty of child abuse.

TruthReallyHurts
TruthReallyHurts

@EdGraham And anyone who puts any credence in any of your posts is guilty of being an idiot. ABOE hasn't "raised property taxes" in years. Why not try using facts and telling the truth sometimes?

BurroughstonBroch
BurroughstonBroch

I am surprised the borrowing is only $100 million since APS spent $749 million in the previous school year.

BurroughstonBroch
BurroughstonBroch

There might be no financial problem, but there are a multitude of problems at APS. Problem #1 is "graduating" decades of students who cannot read, write, and perform basic mathematics at a high school level due to social promotions.

Matt Westmoreland, when are you going to force APS to end this practice? Or will you continue to look the other way?

MattWestmoreland
MattWestmoreland

The cash flow issue is the result of the county not sending out assessments or collecting taxes on time. Once the revenue comes in, there is no problem. We passed a balanced budget. The problem is that the money will be late for the second year in a row as a result of an issue at the County.

TruthReallyHurts
TruthReallyHurts

@BurroughstonBroch APS works through the same issues as most urban public school districts -- dealing with generational poverty and struggling with how to bridge the education gap the dilemma brings. Have any ideas on how to fix this, other than hurling uneducated insults?

Thought not.

heatherness
heatherness

Wow, I see the attacks on Mr Statlander and they seem way overdone, like someone is covering up something by attacking someone with a valid point.  Transparency is just one of the obvious issues raised by this revelation and shows a pattern by APS to "suprise" the public after defacto decisions have been made - furloughs and cutting teachers pay.  At the APS BOE Candidate forum last week, some incumbent board members sounded like they were lecturing the audience as well as the new candidates instead of informing.  They had the "we know best" attitude and "we do not really need to disclose details that the public does not need to know and probably would not understand".  My opinion as well as others in the audience.    Mr Statlander was one of only a few candidates whose emphasis was on not only fiscal responsibility, but on a truly "safe" and conducive learning environment for our students and our teachers.  Also, he emphasized proper respect and support for school maintenance and food service staff.  

bruga
bruga

Maybe if we stopped electing people as uninformed as this Stadlander guy, who clearly prefers shock value, populist-appeal "$100 million debt!" headlines (not unlike "County jacking up assessments to rob you!" ones), we could have a functioning county government.

MugofJoe
MugofJoe

As an active Atlanta Public Schools parent and advocate, Charles is EXACTLY the ilk of person who will ensure 4 years of SACS investigations.

Charles is uninformed and didn't bother to reasearch this issue. Rather, he called the AJC to stir the pot. Charles seems more interested in making a name for himself because he doesn't have children and does not come to APS board meetings, school events, or other educational policy meetings. And no, campaign forums don't count Charles.

Charles, APS needs only informed members on the Atlanta Board of Education. Take your political aspirations somewhere else. Atlanta's children deserve someone willing to be informed on issues before speaking and someone not stirring the pot simply for his own personal benefit.

How many city races have you run for?? Hmmm, maybe voters should consider that Charles just wants to get his foot in the door of politics any old way he can.

Whpeck
Whpeck

Not aware of?! Where were you when Fulton County was deciding to freeze assessments and the Superintendent was writing about what that would mean for the system's budget. Maybe you should subscribe to her blog where she kept all of us updated on the situation (including the recent update that the deficit would not be as great as previously thought and that APS will be restoring teacher raises and eliminating planned furlough days.). https://atlsuper.com

JBene
JBene

Is it a sign of the AJC's disrespect for the role of teachers that the paper did not report that the school board cut teacher pay this summer - but gives top billing today to this non-issue of cash management? 

The school board finally found the money to restore the cut and pay a modest 1.5% cost of living raise and you reported that. When will you interview teachers about how this shabby treatment makes them feel about APS? 

MattWestmoreland
MattWestmoreland

The paper did report on our budget gap and the various ways we were trying to grapple with it (http://www.myajc.com/news/local-education/atlanta-schools-seek-close-budget-gap-million/rMDgUW4G69b9nAmuE17pWP/).

To avoid layoffs and cuts to programming, we ultimately decided to delay the 1.5% COLA we'd originally planned on, and told folks of the possibility of a furlough day in February and another in March. We also told them we'd retroactively reinstitute the COLA and cancel the furlough days if and when we could. Now we have done exactly that.

JBene
JBene

@MattWestmoreland The AJC did NOT report your decision to solve the property digest freeze on the backs of teachers. The article which you link lays out some of the choices that were available to you. 

It fails to mention another option: this would have been a great time to find the savings by cutting Central Office down to the size of comparable school systems.

The board's message to teachers was unmistakable. APS still does not act as though it understands that quality teachers are vital for educating students.

MattWestmoreland
MattWestmoreland

We've cut central office each if the last four years, including this year. If you have another solution for how to solve a gap that could've been $18 million in less than a week without laying off anyone at a school or cutting programming at a school, I'd like to see it.

atl_politics
atl_politics

Mr. Stadlander is clearly more interested in politics that responsible financial management of our school system. And the AJC has furthered that political agenda by not researching the facts (yes Fulton, I'm talking about you).

MattWestmoreland
MattWestmoreland

Anyone following APS over the last three months would have been aware of this cash-flow situation. The situation is anything but a surprise. At least to those of who have actually been concerned about the welfare of APS students and families as well as Atlanta's taxpayers.

This is an action APS has been forced to take each of the last two years because tax collection by Fulton County has been delayed as a result of problems at the County. The problem only intensified after DeKalb County also decided to partially freeze their digest.

Last fall, we used a Tax Anticipation Note to cover essential expenses until tax revenue came in, and repaid the Note by December 31 as required by law. This fall, we are being required to take similar action after well-documented tax assessment and collection delays at the County.

Here is the resolution from last year: http://www.boarddocs.com/ga/aps/Board.nsf/files/ACCQE568E4BA/$file/Resolution%20City%20of%20Atlanta%20Schools%20TAN%202016.pdf

Furthermore, the current cash-flow situation has been widely discussed in public over the last three months-- first at a June budget retreat, and again at the August 7 Board Meeting. Here is the presentation where it was discussed in public at that meeting. The materials for this meeting were published on August 4: http://www.boarddocs.com/ga/aps/Board.nsf/files/ACHJ2P4B1815/$file/2.03%20FY2017%20August%20Board%20Report%20-%20August%20Meeting%203_Final.pdf

And here is the link to the video livestream from that same meeting: https://livestream.com/k12aps/events/7453171

Reb30306
Reb30306

This is a non issue. Fulton County Board decided to not let their appraisers do their jobs and delayed the tax receipts. Any responsible Board and CFO should make sure that their cash flows are high enough to cover their obligations. Too bad APS can't require Fulton County to cover the issuance and interest costs for their incompetence.

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