Treasurer Dr. Harris recommended the district retain arbitrage interest earned on the 2022 bond proceeds to help manage a projected May cash-flow shortfall. The recommendation, presented at the Oct. 16 board meeting, follows consultant and bond-counsel review and is intended to bridge month-end payroll and accounts-payable obligations without disrupting operations.

"We are coming to the board with confidence that we believe that the arbitrage solution is going to work for us," Dr. Harris said, explaining that the district must pay an IRS arbitrage rebate by the five-year anniversary of the issuance or when funds are expended. He said the district currently expects to owe about $4.8 million to the IRS but noted the district can keep a portion of earnings and that holding funds while interest rates remain favorable reduces near-term cash pressure.

The Financial Advisory Committee reported a May low point of roughly 16 days cash on hand and recommended a target range of 30 to 45 days. FAC members said the arbitrage approach would provide time to refine the district's five-year budget and consider nonreferendum options if needed.

Dr. Harris said the administration will return to the board with a formal transfer request if the district elects to move interest earnings from referendum funds to an operating fund later, and stressed that the administration had consulted bond counsel and financial advisors. "As long as rates are favorable, we're actually making all the interest we need to pay the IRS plus a little bit that we get to keep for ourselves," he said.

Board members asked about long-term remedies beyond the temporary use of arbitrage funds; FAC members said the district must tighten budget assumptions, centralize some purchases and pursue ongoing transportation and operational efficiencies. The board did not take a final vote on an interfund transfer at the Oct. 16 meeting; the recommendation was presented for discussion and scheduling of any future formal action.

Clarifying details: Dr. Harris said the district's 2022 bond issuance was $125 million; he described an estimated $4.8 million IRS rebate liability and noted the district can keep approximately 10% of arbitrage earnings under current estimates. He said the repayment deadline tied to either expenditure of the proceeds or the five-year anniversary (circa Feb. 2028) and that the administration will monitor interest-rate movement before finalizing any transfer.

Outcome: Discussion; formal motion on transfers expected at a future meeting.