HAVE CASH FLOW CONCERNS? CONSIDER MNTAAB

Samantha K.

Borrowing pool will be available for school districts in summer 2021

By Joel Stencel, MSBA Director of Association Finance The Minnesota Tax and Aid are participating. Fees include legal fees, printing costs, Anticipation Borrowing Program trustee/paying agents fees, county auditor certificates, (MNTAAB) is available to any school the transaction costs to issue the certificates, and the district that expects to have a cash underwriter’s commissions to remarket the certificates. flow deficit in an operating fund. How much can a school district borrow? Why should I participate in the MNTAAB program rather than borrow on my own? Districts are limited on the amount they can borrow based on the lesser of the two following formulas: (i) 75% of state aid the district will receive in the school year in which the Borrowing costs for participating certificates are issued, or (ii) the lowest projected cash Joel Stencel school districts are reduced since balance (deficit) for the school year in which the certificates expenses of issuance are shared. are issued plus 5% of the previous fiscal year’s cash Due to the streamlined process, school boards need only expenditures for the General Fund 01 and the Operating take a single action. Nearly all the necessary documentation Funds Food Service Fund 02 and/or Community Service is available for signature at that time, eliminating the need Fund 04. to track down signatures during popular summer vacation months. MSBA and the Minnesota Service Cooperatives sponsor the MNTAAB program, which benefits your school What can we do with the money if we do not need it right away? district when participating in the program versus borrowing The district can choose to invest the proceeds in the on your own. following ways: Our audit showed an adequate fund balance. • The MSDLAF Liquid Asset Fund, a variable rate Why should I consider borrowing for cash flow investment. needs? • The district’s local financial institutions, typically banks, Remember, cash flow and fund balance are two entirely which offer both variable and fixed rate instruments. different things. Your school district may have a large fund balance at the end of the school year but may encounter When can we get in the pool? cash flow problems sometime during the school year. The next MNTAAB pool will be offered in summer 2021. How much cash will it cost me to borrow? The deadline to apply for the pool is June 17, 2021.School districts will receive the proceeds from the pool in August. When compared to an individual borrowing issuance, For more information, contact Joel Stencel, MSBA’s Director costs are lower due to how the program is structured of Association Finance by email (jstencel@mnmsba.org) or and the number of both large and small districts that phone (507-934-8122).