Jackson-Madison County schools to borrow money for payroll

Finance Director Mike Nichols told the school board on Monday that the system will have to take monthly loans because of cash flow problems with reimbursements from the state.

The figure discussed for this month was $2 million, with the money likely coming from another county department.

In the coming months, though, the district may have to borrow from a bank, Nichols said. Each loan will be repaid before money is borrowed for the next month’s payroll, he said.

Schools Superintendent Roy Weaver said it would probably take no longer than two or three days to pay the money back.

The school system had to borrow $5 million to cover payrolls at the end of last school year — $3 million from the county interdepartmental fund and $2 million from First Tennessee Bank.

“The schools receive their sales tax revenue and monthly BEP (Basic Education Program) funding between the 16th and 19th of every month,” Nichols said. “The money doesn’t come in until after the mid-month payroll needs to be made.”

Nichols said the cash-flow problem isn’t related to the County Commission’s decision not to raise property taxes.

“Even if they had raised property taxes, it wouldn’t have helped immediately, because property tax revenue doesn’t start coming in until December,” he said.