TRAN loans help bridge funding gaps
Jan. board action can set up February funding
Published: December 5, 2012
Although the passage of Proposition 30 will reduce the state’s reliance on deferred payments to schools, many local educational agencies will nonetheless find themselves in need of cash before revenues from state apportionments come in.
“With the passage of Proposition 30, districts can now plan their cash flow for the second half of the fiscal year,” said Vina Guzman, director of CSBA’s District and Financial Services. “Even though payments deferred until the new fiscal year will be $2.065 billion less now that the measure has passed, it does not resolve the cash flow challenges. Many districts are still positioned to run out of cash in the Spring if they do not issue a TRAN.”
CSBA’s Cash Reserve program
helps LEAs issue and sell tax and revenue anticipation notes—or TRANs—to help them bridge the gap between the 2012 and 2013 fiscal years. TRANs are low-cost, short-term loans to schools. CSBA’s program is the largest pooled TRAN issuer in the state.
In collaboration with Piper Jaffray & Co. and Orrick, Herrington & Sutcliffe, CSBA has traditionally offered TRAN programs to cover cash-flow problems that arise during a given fiscal year, which runs from July to June. The Cross Fiscal Year TRAN program raises funds to compensate for payments owed to districts in one fiscal year but not paid until the next. The program’s successful track record, ease of use and extensive expertise are some of the factors that distinguish CSBA’s program with Piper Jaffray.
The process of applying for a Cross Fiscal Year TRAN is straightforward, but the schedule includes some tight deadlines and requires action by local governing boards; they need to adopt a resolution in January for funding in February.
Learn more about using TRANs or request a board resolution packet to prepare for the next TRAN issue by calling District and Financial Services Director Vina Guzman at 800-266-3382.
Key Dates for Cross Fiscal Year TRANs:
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Dec. 2012: Provide financial data for TRAN sizing
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By Jan. 2013: Adopt issuance resolution at board meeting
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Jan. 2013: Finalize cash flow projections for TRAN sizing
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Early Feb. 2013: Sell TRAN to investors
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Late Feb. 2013: Deliver TRAN proceeds for general fund cash flow use