EL PASO, Texas (KFOX14/CBS4) — Socorro Independent School District said they need a $25.1 million loan to pay their employees for the next two months.

Michael Hinojosa, one of two conservators at the Texas Education Agency who overlooked SISD’s budget and board decisions, explained that the loan was due to the district choosing to pay its employees biweekly rather than monthly checks.

“Socorro has made it a little more complicated by paying people twice a month, so you have to have cash on hand to do your payroll,” Hinojosa said.

SISD will receive a $25.1 million loan from PNC Bank with a 4% interest fee.

TEA maintainer Hinojosa said they plan to repay the loan by January, possibly February, with funds and tax revenues they receive from their states.

The interest charge will be $166,000 until SISD is expected to repay the loan.

Hinojosa also added that due to declining enrollment, the district does not have the funds it needs to pay its employees until state and tax revenues are received.

“It will probably be paid in January. There may be some bloodshed in February, but interest rates won’t happen until a few months later,” Hinojosa said.

The SISD Board of Trustees decided to take the loan at a special board meeting Thursday night.

You can watch the entire special board meeting below:

SISD last needed a loan in 2002.

Hinojosa said the loan was needed at the time because the district was growing at the time, whereas now enrollment rates are falling.

“This is happening in many districts. This hasn’t happened in Socorro in over 20 years… You can’t add employees and add payroll costs and declining enrollment. This is not a recipe for success, and that’s why we need to fix this now,” Hinojosa said.

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The president of the Socorro Education Association (SEA) says employees don’t need to worry about not receiving their next paycheck.

“People thought the district didn’t have money, but the money is there… Employees don’t need to worry. They will always be paid,” said SEA president Angelica Soto.

It’s like the bill is due on the 29th of the month but you get paid on the 31st of the month, that’s the kind of problem.

Soto also said most SISD employees, especially teachers, are looking forward to being paid monthly instead of bi-weekly.

“I believe the majority of teachers were just professional staff who would come back once a month. Everyone was used to a once a month paycheck,” Soto said.

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SISD’s interim superintendent issued the following letter to both parents and staff:

Dear SISD Team,

I am writing to update you on the financial health of our district and the measures we are taking to operate during this difficult time. As we navigate these challenges, I am focused on doing what we can to take care of our incredibly supportive employees, continue to serve our students and community to the highest level, and remain transparent as we reopen Socorro ISD. right way.

While we have made progress in reducing costs, which will help our long-term position, we currently face short-term cash flow timing issues. Due to the timing in which the county receives state and local revenues (usually the last week of most months), the county is projected to be in a negative position in the middle of November and December.

We are pursuing a Tax and Revenue Estimate Note (TRAN) of $25.1 million to ensure there are no payroll interruptions for our employees during the holiday season. Although borrowing money is not ideal, it puts us in the best position to meet the needs of our district.

The district is scheduled to receive significant funding in December 2024 and January 2025, and the note will be repaid by February 2025.

Following a TRAN is not unprecedented. Many school districts were in this situation. In fact, this is not the first time Socorro ISD has borrowed money. The district also used a short-term promissory note in 2002 to meet its obligations.

To help correct this situation in the future, a permanent change to our salaried employees’ payroll program will be required. The payroll of these employees will be once a month at the end of the month as before. While this change needed to be made as soon as possible, we did not want to change the wage schedule of employees during the holiday period.

Instead, we will make the change in February, taking advantage of it being the shortest month and giving employees the opportunity to plan for the change. There will be no changes to the payroll cycle of non-exempt, hourly and substitute employees. They will continue to receive a salary twice a month.

While these actions will help our short-term situation, there is more work to be done to improve our long-term financial health. We will continue our efforts to reduce expenses and increase revenues in the coming period. I will keep you informed as it progresses.

I apologize for any inconvenience this payment date change may cause and the difficult situation we are in as a community. Please remember that these decisions are not taken lightly. Once again, my focus and commitment continues to move Socorro ISD forward. Thank you to the SISD Team for your patience, dedication and understanding as we manage the challenges ahead. We will continue to develop our district with your trust and support.

Sincerely,

Jim

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