Raymond School Board unanimously approves applying for $600,000 State Trust Fund loan
RAYMOND, WI — The Raymond School Board of Education on Mon., Nov. 4, unanimously approved applying for a $600,000 state trust fund loan to maintain operations for the current school year.
The money will be used in one of two ways, depending on the outcome of the community's vote on a proposed $3 million, non-recurring referendum that would add $750,000 to the district's revenues each year for four years.
Raymond School Superintendent Michael Leach told the board the application process is straightforward, with funds potentially arriving as soon as December and it is merely a stop-gap and not a long-term solution to the district financial instability.
"This loan ensures we maintain operational stability for this year regardless of the referendum result," he said.
Loan critical for Raymond School's short-term stabilityDuring the meeting, Leach emphasized the loan's importance to bridge cash flow until the district receives an equalized aid and tax payments in December and January, respectively.
"We need to position ourselves to be viable and adequately funded for the remainder of this school year," Leach stated.
He was clear that the loan would not replace the need for the upcoming referendum.
"If the referendum doesn't pass, we definitely need this loan to support our operations for the rest of the year. If it does pass, the $600,000 will be added to our fund balance," he said.
Payment schedule and cash flow gapsLike most other Wisconsin school districts, the Raymond School District's revenue relies on a payment schedule that does not always align with operational needs, Leach added, which creates cash flow challenges throughout the year.
Typically, the school district would utilize a $1.2 million line of credit with Community State Bank for this purpose. That option is now uncertain due to the district's financial position and upcoming referendum.
"Normally, we would use short-term borrowing to bridge these gaps, but Community State Bank has put us on notice that based on what happens with our finances this year, there could be an impact on our ability to short-term borrow," Leach said.
Tax Revenue Payments: The Raymond School district receives significant tax revenue installments in January, February and August.
State Aid Payments: State equalization aid is disbursed in intervals from September to March, and a smaller lottery credit payment of around $80,000 typically arrives in April.
"We get a small, small payment in December ... then we get our normal 30% collection in January," Leach explained.
Critical Periods: The months following the August payment and preceding the January installment are particularly challenging, prompting the need for short-term financial solutions. The proposed $600,000 loan is intended to fill this gap and ensure uninterrupted operations but only for the current school year.
Debt Exemption: All Wisconsin school districts have a debt exemption, and the amount of each exemption varies based on the size of the district. Raymond School has a $1 million debt exemption that allows the to borrow funds without requiring voter approval.
The new $600,000 loan plus the $300,000 loan received over the summer combined with a remaining loan balance of $54,000 from 2020 puts Raymond School District at $954,000, keeping the district below the $1 million threshold.
Terms of the loanThe proposed $600,000 loan from the Wisconsin State Trust Fund comes with a 5.75% interest rate, repayable over 10 years.
Specifically, payments made during the current school year are marked for interest only. Payments made from 2025 to 2034 are considered the loan term and paid back at 5.75% interest.
This loan complements a $300,000 loan taken over the summer with a 6% interest rate. Both loans are structured so that they can be paid off early without penalty, although early payments require board-approved planning.
Raymond School Board member Janell Wise underscored that the loan is a temporary fix, not a recurring solution.
"This is a one-time $600,000 loan, not an annual solution. The referendum's funds are essential to address budget needs over the next four years," Wise said.
Leach agreed, saying, "If the referendum doesn't pass, we definitely need this loan to support our operations for the rest of the year. If it does pass, the $600,000 will be added to our fund balance.
If approved, the district expects the money by the beginning of December.
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