EL PASO, Texas (KFOX14/CBS4) — El Paso Independent School District officials say the district may need to borrow money next spring to cover a temporary cash shortfall, with projections showing its cash balance could drop below zero in May and fall to about $40 million below zero in June.

During a board trustee briefing, district officials said the situation is a cash-flow issue separate from the district’s budget and fund balance.

They also said the projection could change as actual revenue and expenses come in.

EPISD said the timing of state payments is a major factor.

Julia Spencer reports on El Paso ISD may borrow money next spring to cover temporary cash shortfall (Credit: KFOX14)

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The district is in Payment Class Two, meaning it receives less state funding during some months and then larger payments after the school year ends.

Deputy Superintendent David Bates said, “Instead of getting a steady stream of money each month, we will get the bulk upfront, then we won’t get hardly any in the middle.”

Trustee Brian Kelley said borrowing would add costs.

“We are going to have to spend more money, because we are going to have to borrow money in order to cover these shortfalls at a cost,” Kelley said.

Officials said a short-term loan may be needed around June, though they are still working out how much to borrow.

Board Vice President Jack Loveridge pointed to the projected low point, saying, “Instead of the June ending balance, I see the most severe is about 40 million.”

The district said the loan size will depend on how much it saves over the next few months and whether it receives additional funding before then.

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In a discussion about a possible loan, Loveridge asked, “Interest rate on that would be around four percent?”

Treasurer Walt Byers replied, “Four and a half.” Loveridge then said, “Four and a half. So we’re talking about 1.7 million perhaps if its 40 million.”

The board will further discuss the district’s cash-flow projection during it’s regular board meeting on October 20th.

If district officials decide to move forward for a possible loan, they will ask board trustees for approval most likely in March.

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