The Dearborn Public Schools district is looking for supplementary funds to meet expenditures over the summer months, and may take advantage of a state-sponsored low-interest loan program.

The schools will need to borrow $10 million to make up for periods of low cash flow that result from expenditures and state aid payments that are mismatched. Often, this occurs because school districts operate on a July to June fiscal year; the State of Michigan fiscal year runs from October to September.

Additionally, the district’s finance committee has sought bids on its auditing and financial services.

“From time to time these things do come up for bid,” said David Mustonen, the spokesperson for the school district.

“The school district has a bank account, much as individuals have, and we are charged fees for services,” he said. “The board simply wants to explore its options.”

The district’s audit–which, per state law, must be conducted annually and submitted to the state–must be conducted by a qualified firm.

School Board Trustee Joseph Guido, who serves on the finance committee, said he was disappointed the district was going to have to go for a loan. DPS has taken short-term loans in the past, but last year, was able to avoid doing so.

“We’re back to a position where we have to borrow money,” he said. “Obviously, we want to limit our interest payments on that kind of money.”

The district will consider a number of options when it comes to securing the loan, one of which will be the State Aid Note Program.

The SANP, which is administered by the Michigan Finance Authority, pools loan funds so districts can take advantage of bargain basement interest rates.

The program, for lenders, is considered low-risk because once state aid and other revenue streams flow in, the loans are paid back. Typically, this happens in a matter of months.

Districts like the program because it allows them to pay bills and meet payroll obligations, which takes pressure off fund reserves.

If the district chooses not to avail itself of the SANP funds, it could seek money from other sources, or create a hybrid of loans and bonds, as long as it makes financial sense, said Guido.

The district recently asked seven auditing firms for proposals to determine which qualified firm would be able to provide the service with the least expense. Three responses were received, but there was a $100,000 disparity in terms of cost between two contending firms, and the third was disqualified, Guido said.

He suggested that further research be conducted to make sure both firms understand what will be required because bids typically aren’t that far apart.

Eight requests for proposals for banking services were sent out, and five responses were received.

Banking services are currently provided by Comerica Bank.

The board will make decision to regarding which auditor and bank to hire at a future meeting.