Peabody bankruptcy causing financial crisis for Soroco schools
Oak Creek — The South Routt School District is facing an immediate financial crisis related to a missed county property tax payment from Peabody Energy, Superintendent Darci Mohr said Monday.
Mohr wrote in a letter to staff and the community that taxes from Peabody account for about 40 percent of the district’s annual revenue, and all the taxes typically received by the district in June specifically help the district pay bills and payroll from July to October each year.
“We have a serious cash flow issue,” Mohr wrote.
Peabody Energy, which filed for Chapter 11 bankruptcy in April, neglected to pay a property tax payment due last Wednesday.
The immediate impact to the South Routt School District, which operates on a $5.3 million annual budget, is roughly $1 million, Mohr said.
“It is pretty serious,” she said.
Without the payment, the district has reserves to cover about five weeks of operation, Mohr said.
Although schools are closed over the summer, most district staff earn their salary during the school year and spread out paychecks through July and August.
Since learning about the missed payment last Wednesday, Mohr and district finance director Mark Rydberg have sprung into action identifying possible sources of emergency funding to keep the district operating.
Mohr said the Colorado Department of Education has agreed to award South Routt its annual funding allocation, about $1.3 million, in two payments in July and August, six months earlier than the money is regularly given to districts.
“It will buy us time and get us through August,” Mohr said.
The district is also working with Colorado politicians and State Board of Education member Joyce Rankin to request a $1 million emergency loan for the district from the state board’s contingency fund.
Mohr is hopeful the topic will be added to a July 7 state board meeting in Denver.
“I hope we will be able to get that money, but there’s no guarantee,” Mohr said.
The district also is requesting a meeting with Gov. John Hickenlooper to discuss possible solutions for the district’s financial crisis.
The district would also explore local grant funding or private funds, Mohr said.
“We’re going after everything we can,” Mohr said. “Every avenue.”
Mohr, who is an attorney, said the district is also in touch with legal counsel to attempt to force payments from Peabody as part of the bankruptcy proceedings, but she said that Routt County officials would be leading the legal fight.
The news of Peabody’s missed payment came just days before the South Routt Board of Education was scheduled to pass a final budget, which was expected to be balanced.
“We thought we were sitting pretty,” Mohr said.
The board postponed its Tuesday meeting, which included approving the district budget, until next Tuesday, June 28.
Districts are required to adopt final budgets for the 2016-17 school year by the end of June.
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