A special Toledo Board of Education meeting last night included the approval of millions in borrowing and some heated words among members of an increasingly divided board.
The board approved a plan 4-1, with board member Larry Sykes voting against it, to borrow $15 million from PNC Bank today to cover payroll and other expenses next year until tax revenues start to come in.
The board is trying to meet payroll and other expenses as it grapples with a mammoth budget crisis. It's not unusual to borrow money like this, but the board hasn't had to do it in a few years.
The board is in the process of closing a $39 million budget hole next fiscal year, which begins next month. That includes TPS employee layoffs and cuts to programs, including the elimination of high school bus service, high school sports with low participation, and elementary summer school.
The board also faces a projected $44 million shortfall for the following year attributed to some federal stimulus money drying up and state education funding projected to be cut.
The heated words came after Mr. Sykes questioned TPS Treasurer Dan Romano at length about whether he adequately shopped around for the lowest interest rates. Mr. Romano said he had looked at banks with branches inside the school district.
"I'm willing to bet you we could have gotten a better rate," Mr. Sykes said. "Anytime you limit anything, you restrict opportunity."
Mr. Romano said he felt the interest rate was competitive with what he could find in the open bond market, but he didn't want to subject the deal to the risk of a higher rate or start that process.
He said he felt better locking down a deal with a set range of potential rates at a local bank. Mr. Romano said PNC was able to find an "investor" to lend the money for one year. He said the assurance that the loan was approved also played into his decision.
After Mr. Sykes made some comments about the process, board President Bob Vasquez, appearing frustrated, said: "Ask your question. … I'm trying to move this along."
Board member Jack Ford jumped in to mediate, and Mr. Sykes asked more questions of Mr. Romano and stated a primary concern. "I'm not comfortable in the way the treasurer goes about investing," he said.
Mr. Romano said he might have been able to get a lower rate in the open market, but it also could have been higher and cost more money.
He said the school system would pay $196,000 to $218,000 depending on the rate finalized today. He said he has watched the bond market this week and feels it's a competitive rate.
After the explanation, Mr. Sykes said to Mr. Vasquez: "With all due respect, don't ever raise your voice to me again."
Contact Christopher D. Kirkpatrick at: