The city of Philadelphia intends to borrow another $30 million to keep the schools afloat while the district awaits proceeds from the cigarette tax finalized Tuesday by the Pennsylvania Senate.
The city borrowed $27 million to help the district meet expenses for the fiscal year that ended in June. It agreed then to borrow $30 million more in September.
City officials also plan to refinance the $27 million in loans from earlier this year.
Refinancing the short-term loans will lock in favorable fixed interest rates instead of the variable rate being paid now, said Rob Dubow, city finance director.
“We did the $27 million borrowing earlier, now there would be a $30 million borrowing. If, however, when we go to market for the borrowing, if it becomes clear it would be cheaper if we re-funded, like taking out a new mortgage, the earlier deal we would do that,” Dubow said. “So it gives us some flexibility and the ability to save costs if we can.”
Matthew Stanski, the school district’s chief financial officer, said he’s concerned about making sure the schools can meet payroll and other obligations.
“It’s already built into our budget so, obviously, it was used to balance the budget, get teachers into classrooms, things of that nature,” Stanski said Tuesday.
The first of the two bills was approved by city council’s finance committee; the second will be introduced on Thursday.
The funds will be paid back with proceeds anticipated from the city’s 1 percent sales tax surcharge.