Program

Timing differences between revenue collections and disbursements cause many Colorado school districts to incur annual cash flow deficits. The salaries of some school district employees are paid over a 12-month period, and some school district expenses occur on a relatively consistent monthly basis, although most salaries and expenses of school districts are incurred during the traditional school year of September through May. The primary sources of revenue to school districts to meet these expenditures include (i) funding from the State pursuant to Article 54 of Title 22, C.R.S., known as the Public School Finance Act of 1994 (the “Public School Finance Act”), which is received in approximately equal monthly amounts throughout the July 1-June 30 fiscal year of the school districts and the State (the “Fiscal Year”), and (ii) property taxes levied by the school districts, most of which are received in March through June when property taxes are paid by taxpayers. As a result, school districts often experience cash flow shortages during the fall and winter months before such tax revenues are received. School districts may address this cash flow shortage in a variety of ways, including: (i) borrowing funds from the State; (ii) transferring funds to the school district’s general fund from other school district funds on a short-term basis; (iii) borrowing funds on a short-term basis through the issuance by the school district of tax anticipation notes; or (iv) borrowing funds on a short-term basis from a bank or other lender.