Possible End To High Interest Rates On Loans To Schools

Jan 19, 2017

Credit Wyoming Department of Education

School districts that temporarily borrow funds from the state may no longer face high interest rates. A bill to remove a 6 percent interest rate on money borrowed from the state’s Common School Fund passed the Wyoming House and is now before the Senate.  

Teresa Chaulk, the superintendent and business manager for Lincoln County School District #1, said the loans help cover gaps in cash flow caused by the schedule of payments set forth by the state. She explained that as a repatriation district, she has to send back surplus funding to the state, but that sometimes that check is due before she’s received her next allotment of funding from the county assessor’s office. To cover operations costs she takes out a loan.

Proponents of the bill argued money is moving from the left pocket to the right pocket just to penalize schools, but Representative Scott Clem suggested the high interest rate ensures districts only borrow if they have to. For Chaulk, that misses the point of the loans.

“Keeping us on our toes makes absolutely no sense. It’s supposed to be about educating kids. Not about holding business managers or superintendents’ feet to the fire,” said Chaulk. “In a nutshell the 6 percent interest is penalizing all recapture districts when in essence recapture districts are helping fund the state.”

Chaulk further explained that she feels the policy is especially unfair for districts like hers because, as she put it: “if I collect $15 million and I have to send $6 million of that to the state because my foundation guarantee was only $9 million, they are essentially charging us interest on our own money that we’ve collected for education.”

Chaulk has never had to pay the interest, but she said the extra financial shuffling takes time. Time she'd rather spend educating kids.