OSHKOSH, Wis. (WISS) – The Oshkosh Area School District (OASD) voted unanimously Wednesday night to borrow no more than $5 million to cover operating expenses.

Back in August, the board also approved a $10 million short-term loan.

Drew Niehans, the executive director of business services, said the borrowing is commonplace and is just a measure to create a cash flow while waiting for tax payments.

“This is truly a cashflow issue. It has nothing to do with the budget. It has nothing to do with anything that the state just set within our budget calculation or enrollment numbers. None of that is part of short-term borrowing,” Niehans said. “Short-term borrowing is really the cash we have within our bank accounts, and where our expenses are to pay our bills and make payroll.”

Superintendent Bryan Davis said the issue is the regularity with which the state provides funding to the district.

“The short-term borrowing is a consistent process that we’ve done historically. It’s common among municipalities,” said Davis. “Part of the issue–And we’ve advocated for this in Madison and haven’t gotten the change yet–is just related to when the revenue payments are provided to the district.”

The district needs funds to cover higher-than-expected health care claims under its self-funded program. In addition, the Wisconsin Department of Public Instruction delayed administering grant funding.

Board member Christ Wright summed the issue up in what he called layman’s terms.

“We’re waiting for the state to reimburse us, and then we pay that money back. Right? That’s how it works,” said Wright. “A lot of people have talked across the state legislatures for a long time that our state funding mechanisms probably aren’t exact. And if they were, and they were different, then school districts wouldn’t have to short-term borrow all the time. So that’s just my layman’s quick analysis.”

The $5 million short-term loan carries a 7.5% interest rate, which will cost the OASD about $94,000 in interest. Niehans said the short-term borrowing from Wednesday night and the action in August will be paid when the tax allocations are paid to the school district in January.

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