The Saline Board of Education approved the borrowing of $9.95 million to make payroll over the summer before the state resumes funding the school district in October.
Assistant Superintendent of Finance Miranda Owsley made the recommendation to the board during Tuesday's meeting.
"We do this each year to help us through the September timing when we do not receive state aid," Owsley said.
This year's loan is for about $450,000 more than last year's.
'We were hoping to reduce borrowing this year before the closure, but we've been advised to consider there may be cuts to the current year cash flow," Owsley said.
The loan has become an annual occurrence for the school district because the fund balance isn't large enough to carry the district through the summer months.
The district's fund balance is pegged at $3.2 million.
A presentation by Owslet detailed the decline of the district's fund balance. It peaked at 13.7 percent of the general fund budget in 1997-98 and will now sit at about 5.3 percent of the budget.
It fell to as low as 2.3 percent of the budget in 2011-12.
Owlsey's presentation explained the budgetary pressures caused by rising retirement costs.
To pay for retirement costs, the state has continually increased costs for school districts. In 2001-02, the district paid 12.1 percent of its payroll cost to fund retirement. That number quickly rose to $17.7 percent in 2006-7 and then to 24 5 percent in 2011-12. Today it sits at 27.5 percent of payroll costs.
At the same, per-pupil funding from the state has been relatively flat. From 2008-09 to 2017-18, per-pupil funding rose from $7,643 to $7,647.
It has since jumped to $8,113.
Over the years, at various times, Board of Education Trustees have argued for increasing the fund balance.
Facing budgetary pressure, district leaders elected to have a smaller fund balance and invest more in instruction and maintain quality of education.
The consequence of that decision is felt when the district is required to borrow during the summer.
The low fund balance also puts the district in a more precarious position with the potential for huge funding cuts this year due to the economic crisis caused by the COVID-19 lockdown.