CSFA Offers Additional TRAN Pools for K-12 Deferrals Cash Management
The California School Finance Authority offers a Tax and Revenue Anticipation Note (TRAN) pool for K-12 schools, providing a lower cost alternative to the single-district TRAN. CSFA estimates that districts are expected to receive only about 70% of their State apportionment payments for 2020-21, with deferrals from February 2021 to June 2021. Deferrals may continue into 2021-22. Absent significant cash reserves, districts will need to borrow from external sources like their counties or investors by issuing a TRAN.
TRANs are a short-term cash management tool used to even out temporary cash deficits in advance of the receipt of revenues. TRANs are issued at lower tax-exempt interest rates and have several Federal tax law requirements, including repayment within 13 months of issuance from the same fiscal year’s reserves.
Pooling TRANs can offer lower upfront fees by combining the TRANs of multiple districts at one time to create economies of scale. By creating a larger offering, the pool can attract more investors and increase competition to lower interest costs. CSFA’s Pooled TRANs will close and provide funds in February 2021 before the deferrals begin. CSFA anticipates offering additional series of Pooled TRANs in April, May, and/or June.
For more information about CSFA’s Pooled TRANs, please click here.
On July 28, CSFA conducted a webinar to discuss their Pooled TRANs offerings and provide information on the FY 2020-21 budget and its implications for cash flow management. For the webinar slides and additional information, click here.
CASH Legislative Advocate