WALHALLA — The School District of Oconee is asking to borrow about $2.5 million from Oconee County to deal with a cash-flow issue, and county officials might oblige for the chance of getting the loan repaid with interest.

School Superintendent Mike Lucas said Wednesday that the District’s fund balance of $18 million has evaporated since cash reserves peaked June 30, because the money has been used to meet operating expenses during the ensuing months when tax revenue collections tend to dry up.

Lucas said almost all school districts have to borrow in the fall because they don’t have enough fund balance to cover obligations until the bulk of tax revenues arrive in January from local taxes.

The school boss said borrowing the money from the county presents a “win-win situation” to both sides. He said the District would have the cash it needs to cover expenses for the remainder of the year, and the county would get the money back with interest once tax revenues start to kick into high gear in January.

Otherwise, Lucas said, the District would have had to either obtain a tax-anticipation note or take out a short-term loan from a commercial bank. He said both of those options entail either attorney fees in the case of the note or interest on the loan.

“We actually save taxpayers’ money,” Lucas said of borrowing the money from the county. “The interest we pay would go back to the county instead of a private bank. We saw it as a win-win situation.”

Interim Administrator Gene Klugh confirmed that he brought the District’s request before the County Council during an executive session at Tuesday night’s regular council meeting.

Klugh said the school district cash flow problem is exacerbated by the county’s delay in mailing out tax notices because of a computer software glitch. Without tax notices going out, early-bird taxpayers are not sending in their payments, which in turn delays the receipt of local tax revenues for schools.

Klugh updated council on the delay with the tax notices and said he was hopeful they would be out in the next two weeks.

The loan or tax anticipation note to the school district would be based on tax revenues the district received late last year.

For example, tax collections sent to the district in September 2008 was $575,130.89; for October 2008, it was $2.26 million; and $1.4 million in November of last year. Tax collections tend to peak in January. In January of this year schools received $24.1 million in tax revenues.

County Treasurer Greg Nowell said he sees the transaction with the school district as “a sound business decision.” He said the transaction, if it is done, would be handled as a tax-anticipation note with the county getting interest on top of the loan.

“It’s good for both parties,” Nowell said.

The school district’s request comes at a time when council is being pressured to explain its own large cash reserves and whether residents are being overtaxed.

carlos@dailyjm.com | (864) 882-2375