NORWICH – During Thursday night’s Norwich City School Board of Education meeting, Interim Superintendent Diana Bowers said the school needed to take a $3.5 million loan to cover costs due to a lack of funds.

The Norwich Board of Education took the unprecedented action of taking out a loan to cover expenses. Bowers said the school had first thought it would need a $5 million loan. Though the district decided to only borrowed $3.5 million, the superintendent said the district may have to borrow more sometime in 2020 to meet further costs.

“What we need to do, as we get close [to the end of the year], is to look at the cash flow issues to see if we have to just take another one, which maybe, hopefully not,” said Bowers

In January of 2019 New York State Comptroller Thomas P. DiNapoli announced Norwich was one of 26 school districts in the state that are significantly fiscally stressed. At the time the report stated the school to have a fiscal score of 70.0, along with four other districts in the state. The comptroller’s office said the report was based on financial reports submitted at the end of 2018.

“We were having a cash flow issue and it doesn't mean that we won't have enough money, it just means that when the state and the government give us the money it doesn't allow us to be able to just flow through the year. Generally what districts do when they know they're getting state aid a month and a half from now but they need the money for payroll, they'll pull money out of their fund balance, we don't have money in our fund balance.” said Bowers.

Bowers informed the board that short fall will be covered and the school will be slightly in the black with the aid of a revenue anticipation note (RAN).

“We did take, for the first time, a revenue anticipation note. We thought initially we were going to take one for five million. We realized that was not necessary, we ended up taking one for three and a half million and that went into the bank today. We hope to pay the entire RAN off by the end of the year,” said Bowers.

Bowers explained that a revenue anticipation note is a short term loan for one year that school districts can take against expected income with a low interest rate, usually no more than two percent.

According to Bowers, the district has been working with government officials to improve the financial stability of the school. NYS Senator Fred Akshar is currently working to create a bill that will release funds that the NYS Education Department is holding in building aid.

“They have about $850,000 dollars that's sitting in an account and they're telling us that it won't be released for anywhere between seven to ten years. The senator didn't really feel that was an appropriate response so he's looking into it so we can put that money back into our fund balance,” said Bowers.

Bowers said the school will be looking into more permanent solutions to cover the anticipated short fall so they don't have to continue to rely on “one-shot deals.”