Thursday, June 11, 2015

The District Wants to "Borrow" Capital Money

Hard to know if this is just sloppiness on the part of staff or if they think Board policies really don't mean all they say (just what staff says they say) or if they just think the Board is very dumb.

As I say to my readers, I will say to staff, "Words have meaning."

My letter to the Board:

Dear Directors:

Today's A&F meeting sees the district staff wanting this:

Board action is required to authorize an Interfund loan, per Policy No. 6021. Interfund loans are a temporary loan of moneys between one district fund and another.

Fiscal impact to this action will be $ revenue for the General Fund should the Washington State Legislature budget process shut down funding for all state supported agencies, including school districts . This will be a short term two to three month loan and will allow the district’s General Fund to maintain cash flow for payroll and all other normal operating expenditures. The revenue source for this motion is fund balance in Capital Projects Fund.
Okay, first Policy 6021 says this (partial):

Interfund payables resulting from processing payroll or contracts funded by multiple funds in the normal course of business are excluded from the definition of interfund loans. 

So staff says in the BAR that they WILL be using the loan for payroll and yet the Policy says you can't use the interfunds for payroll.

The resolution will contain the exact amount of the loan, the funds involved, the specific source of funds for repayment, the schedule for repayment within the next calendar year and the interest rate involved.

There is no amount.  At the bottom of the BAR it says "interest free" and  "schedule" is the vague "...will be repaid...when apportionment funds are restored." This does not appear to be true to the spirit of the Policy.

Also, isn't this jumping the gun? The Governor seems quite sure that things will get done on-time this session.

Also, it's kind of odd that there is no dollar amount to this when staff knows quite well how much it costs to run the district in July/August. They have years of records (data!) to show this.

Lastly, here's the Recommended Motion:

I move the adoption of Resolution 2014/2015-32 authorizing an Interfund loan from the Capital Projects Fund to the General Fund in the amount of $ million.

Danger, Will Robinson!

Where's the notation, "under Policy No 6021" that says it is "temporary?"

Where's the notation that this will ONLY happen if the Legislature doesn't get a budget done?

 This "recommended motion" looks like something of a blank check.

Please don't do this.


Anonymous said...

MW, thanks for this. Just wow.


Anonymous said...

Wow, you're completely misinterpreting the policy you quoted. As you said, words have meaning. You're taking two unrelated things and combining them, making the District look bad in the process. It's incorrect and unnecessary.

Interfund payables resulting from processing payroll or contracts funded by multiple funds in the normal course of business are excluded from the definition of interfund loans.

First, Interfund Payables are not Interfund Loans. They are two completely separate things. The paragraph you quoted literally says "Interfund payables … are excluded from the DEFINITION of interfund loans." In other words, Interfund Payables are not Interfund Loans. They are different.

Second, what that paragraph is actually saying, is that... if the General Fund pays for Capital Fund items, the Capital Fund can transfer money to the General Fund to repay them and it WILL NOT be considered a loan. Let me give you a fictitious example:

Normally, a computer guy is funded from the General Fund. However, the District is doing a major upgrade to computer equipment with Capital money. The computer guy is at the school site and installing the computer equipment. Because of the change in duties, the computer guy is temporarily partially funded by Capital money. The General Fund processes the computer guys salary as normal, and the Capital Fund refunds the General Fund for the cost. This money, an "interfund payable resulting from processing payroll funded by multiple funds" is not considered an interfund loan.

That is what the policy is saying. I recommend you update this blog accordingly.

- Randomly

Melissa Westbrook said...

I didn't say "interfund payables" are the same as "interfund loans." I said that it looks like "payroll" cannot be part of an "interfund loan." You can go back and re-read what I wrote.

I note you didn't address the other issues with this "loan."

I think you are trying to throw me and others off of what is TRULY the case.

Not too worried. said...

I think the governors office ordered all agencies to create contingencies if there is a government shut down. This might be part of that.

Anonymous said...

This entire article is about "interfund loans." And as backup for your belief that payroll shouldn't be paid for with borrowed money, you quote a paragraph about "interfund payables." That is LITERALLY you saying (or inferring, or implying, or misunderstanding, or thinking, or whatever word you want to use) that they are the same thing. As you said, words matter. As I said, it's incorrect and unnecessary.

- Randomly

Melissa Westbrook said...

Again, that's fine to have a contingency.

But we have a policy for this "loan" stuff and it does not look like it is being followed.

mirmac1 said...

I see this as a proper step in the event of government failure and shutdown.

Anonymous said...

Melissa, just want to say THANK YOU for keeping on top of all of this and making it public. Thank you thank you thank you!

Melissa Westbrook said...

Hey, will you look at that.

The staff attached a resolution to this BAR that met all the requirements of the Board policy.

And Director Martin- Morris asked if this had EVER been done before. It hadn't.

And Director Martin-Morris asked if could read that these are dollars to be paid back and a short-term loan. Kathy Technow in Budget said yes, that's in the resolution. But he pointed wasn't in the BAR. Oh sure, she said, she "forgot" to put that in BAR.


mirmac1 said...