Howland area school district seeks $1.1M loan to keep creditors from seizing property

Posted Jan. 04, 2012, at 8 p.m.
Last modified Jan. 05, 2012, at 10:31 p.m.

LAGRANGE, Maine — Creditors owed about $1.03 million in past-due bills could seize property and other SAU 31 assets if voters don’t approve a $1.1 million loan the school district is seeking from the Maine Municipal Bond Bank, Superintendent Michael Wright said Wednesday.

“We want to impress upon [voters] that this is our best opportunity to take care of this debt. I want to let them know that it will not go away,” Wright said. “We do ultimately have to pay it and there is no bankruptcy protection [under state law] for school districts that go into bankruptcy.”

Wright spoke in anticipation of two public hearings for voters who have questions about the school system’s debt and a special referendum that will be held in the towns the district serves — Burlington, Edinburg, Enfield, Howland, Maxfield and Passadumkeag. The hearings will be held at 6 p.m. Jan. 9-10, at Hichborn Middle School in Howland, and the vote will occur in the district towns from 8 a.m. to 8 p.m. Jan. 24.

As of Wednesday, the district owed vendors about $580,000 for everything from medical insurance to school supplies, and a Tax Anticipation Note of $450,000 owed to Bangor Savings Bank was past due as of Dec. 8, Wright said.

The school system has paid Bangor Savings its interest but not the principal. The bank and vendors have been very patient with the school system, especially given the state of the economy, but that won’t last much longer, Wright said.

“They have really been great. Some of them have been small businesses who have really bent over backwards to work with us, but they are really hoping that we will get this approved because they are tired of waiting,” Wright said.

The school district sought the Maine Municipal Bond Bank bond to cover a $1.2 million deficit created partly by faulty budget practices and insufficient board oversight. Wright discovered the problems shortly after his SAU 41 consolidated with the district on July 1. A review of SAU 31′s records revealed, he said, that school leaders gradually had created the deficit by projecting revenues from undesignated fund balances that never actually occurred.

The bond bank’s executive director, Robert O. Lenna, credited school leaders with dealing directly and adroitly with the financial miscues when he announced the bank’s tentative award of the loan on Dec. 5. Besides Wright becoming superintendent and the layoff of 14 ed techs and three maintenance workers, the school district has a new business manager and appointed new board leadership.

The loan would come with a 2 percent interest rate. Wright hopes voters will approve it and end SAU 31’s financial crisis.

“There are many other things a superintendent should be doing other than making payment arrangements and answer phone calls from vendors,” he said. “I would like to get it behind us and get us moving in a positive direction.”

CORRECTION:

An earlier version of this story incorrectly said in the headline that the school district is in Milo. SAU 31 encompasses the Howland area.

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