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Socorro ISD borrows $25 million to make payroll amid budget woes [1]

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Date: 2024-11-01

The Socorro Independent School District will borrow $25.1 million to cover payroll costs for its over 7,000 employees the next three months.

The SISD school board voted unanimously Thursday to approve the issuance of a tax and revenue anticipation note. Trustees Ricardo Castellano and Pablo Barrera were not present at the meeting.

The tax notes are a type of bond that does not require voter approval and can be used for various purposes, including to cover operating costs or cash flow deficits.

“Part of the reason that we’re doing this, to make sure that we continue to operate and pay employees, especially over in any other obligations, especially over the course of the holidays, which is when you know our cash balance, our liquid cash balance to be able to pay those obligation runs lowest,” board President Michael Najera said during the meeting.

SISD trustees and administrators said they also plan to pay the note by February, when the district expects to receive scheduled revenue from the state.

This note comes as SISD deals with a $22 million budget deficit, is being overseen by two conservators from the Texas Education Agency and is searching for a new superintendent.

“This is a short-term loan, so it’s not necessarily that we don’t have the cash and that it’s not coming. It’s just that we don’t have it right now,” Najera said.

Budget Director Susan Olson said the note is needed because of overspending, but did not give more details.

Estrada Hinojosa & Company investment banker Don Gonzalez, the district’s financial advisor, also said the note is also needed because SISD does not have enough reserves.

“You have (Elementary and Secondary School Emergency Relief) funds that are no longer available, you have (average daily attendance) that is decreased. You have different things of that nature that have implications on where those cash reserves are and consequently, the district’s cash reserves have come down,” Gonzalez said.

SISD has not responded to El Paso Matters’ questions about the amount the district currently has in reserves. The district last reported it ended the 2022-23 school year with $72.9 million in reserves, enough to keep the district running for 55 days.

The issue was caused in part by a change in SISD’s payroll schedule from once a month to twice a month over a year ago, Texas Education Agency conservator Andrew Kim said during the meeting.

“That causes a timing issue when the TEA or state of Texas reimburses you. So we’re needing to go ahead and bridge that situation going into the month of January,” Kim said.

SISD is looking to revert its payroll schedule back to once a month for salaried employees starting in February to ensure it has the funds needed to cover employee pay. Hourly and substitute employees will keep getting paid twice a month, SISD Acting Superintendent James Vasquez said in an email to parents and employees Friday afternoon.

“While these actions will help our short-term position, much work remains to improve our long-term financial health,” he said in the email. “Moving forward, we will continue efforts to reduce expenses and increase revenues.”

Vasquez in the email said pursuing the tax revenue anticipation note is “not unprecedented.” He said Socorro ISD used the short-term notes in 2002 to meet its obligations.

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[1] Url: https://elpasomatters.org/2024/11/01/sisd-loan-bond-employee-payroll-tax-revenue-anticipation-note/

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