The Fayette County Board of Education voted unanimously Aug. 18 to approve a low bid by SunTrust Bank for a $12.5 million tax anticipation loan that will provide funds for expenses until property taxes come in later this year.

School board members selected Comptroller Laura Brock’s recommendation on the SunTrust bid for a $10 million bank-qualified, tax-exempt note at 1.94 percent interest and a $2.5 million non-bank qualified, taxable note at 2.87 percent interest. The interest rate on the full amount in the form of a tax-exempt, non-bank qualified note would have been 2.37 percent.

“Each year we borrow to get to tax collections,” said Brock at the beginning of her presentation. She noted that the interest rate on the bid was lower than what the school system paid for last year’s tax anticipation loan.

Other bids at higher rates were provided by Regions Bank and Wachovia Bank.

A total of 15 lending institutions received bid request letters from the school system. Aside from the three bids received, two other banks provided no-bid responses.

As is customary for local tax levying entities borrowing money against future revenues, the note must be paid off prior to Dec. 31. Brock said she expected to be able to pay off the loan by the Thanksgiving school break.

Also at the meeting, the board voted to increase school facility rental rates by 10 percent. There has been no increase to help defray utility or wear and tear costs since 2005. Classroom rental will go from $45 to the new fee of $49.50.

The board also voted to allot 26,000 miles of bus travel to each high school. A portion of earlier discussions during the budget process on ways to combat higher fuel costs, the move should encourage school staff to do more coordinating of off-campus trips. The 26,000 mile limit should save approximately $32,000. The measure will be re-evaluated at the end of the year.

login to post comments