State issues emergency loan so Buena Vista schools can pay off state loan
The financially troubled Buena Vista school district got an emergency loan from the state Wednesday. But the district’s future remains uncertain.
Buena Vista schools borrowed money from the state last year. This was a typical advance that a lot of school districts get in the summer until state aid payments are dispersed in the fall.
The district needs to repay $2 million by August 20.
“The district otherwise would have defaulted because they don’t have the money to make that payment,” said Terry Stanton, a spokesman for the Michigan Treasury Department.
Instead of letting the school district default on the loan, the state’s Emergency Loan Board issued a new loan to repay the old one.
Stanton says there could’ve been “potential implications” for the state and other school districts if Buena Vista defaulted, but he couldn’t say specifically what those might be.
Similar loans have been made to Muskegon Heights Public Schools and Highland Park Public Schools, both of which are under the control of an emergency manager.
The Emergency Loan Board also agreed with the findings of the Michigan Department of Education that the Buena Vista district is under “probable financial stress.” That’s another step in the process of potentially getting a state appointed emergency manager.
Normally the next step in the process would be to recommend the governor appoint an independent review team to go over MDE’s findings. Instead, they want Gov. Rick Snyder to wait until a joint recommendation from the state superintendent and state treasurer comes out on whether the district should be dissolved, Stanton said.
Buena Vista schools cannot afford to open school in the fall.
If the district is dissolved, Stanton says the new loan would be repaid by October 2015 with property taxes collected in Buena Vista Township that would’ve otherwise gone to Buena Vista schools.