State asking South Routt for repayment of Peabody loan | SteamboatToday.com

State asking South Routt for repayment of Peabody loan

Teresa Ristow

Fourth-grade students listen during a music class at South Routt Elementary in November.

Editor’s note: This story has been updated since it was originally posted.

The Colorado Department of Education is asking the South Routt School District to urge Routt County Treasurer Brita Horn to accept a tax payment from Peabody Energy Holdings.

The State Board of Education in July authorized a $1 million loan from the Colorado Department of Education's contingency fund to help South Routt, as the district was facing an immediate cashflow issue due to the nonpayment of taxes by Peabody.

Peabody is the largest taxpayer within South Routt's district boundaries, and therefore, the taxes the company pays significantly affect the district's funding.

The loan to South Routt was given on the condition that if the district received the tax money owed by Peabody, the district would repay the state loan.

Peabody, which filed bankruptcy in April, was cleared to pay the overdue taxes in July, but Horn has refused to accept the payment unless it includes interest and fees on top of the $1.77 million in taxes, citing a legal obligation to accept the interest and fees at the same time as the payment.

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On Friday, Oct. 21, South Routt School District Superintendent Darci Mohr received a letter from CDE Deputy Commissioner of Operations Leanne Emm asking the district to put pressure on Horn to accept the tax payment offered by Peabody.

"We respectfully request the district to urge the county treasurer to accept Peabody's payment of back taxes so that state funds are returned to the department," Emm wrote.

Emm noted in her letter that the department's $1 million loan to South Routt depleted the contingency fund, meaning the department doesn't have the ability to help any other districts that may need financial assistance.

Mohr said Thursday she planned to discuss the situation with the school board during a special meeting that evening.

"We want to pay the state back," Mohr said.

Along with the letter to Mohr, CDE sent a formal request for repayment from South Routt School District for $564,000, the portion of the $1 million loan related to the 2015-16 taxes owed by Peabody.

The remainder of the $1 million was an advance for the property taxes it was estimated Peabody would owe the district in 2017.

Mohr said it would be ideal for the district to pay the state back the taxes Peabody has attempted to pay, knowing that the district may return to the state for more money in spring 2017 if Peabody doesn't make its next tax payment.

Mohr planned to discuss with the school board possible contingency plans that include deep cuts the district could make in order to afford paying the state back with or without the money from Peabody.

Horn said Thursday she was aware of the state's request to South Routt but believes accepting what she sees as an incomplete payment from Peabody would be against the law.

"Whether a local school board owes money to a state agency is immaterial to the law governing to my office," Horn said via email. "The request made to me is a request to break Colorado state law, which I am unable to do. I have been working diligently with Peabody Energy to continue our confidential discussions about resolving this matter and significant progress has been made."

Horn drafted her own letter to Emm Thursday in response to CDE's letter to South Routt.

"I sympathize with the circumstances of both the South Routt School District and the State Board of Education," Horn wrote. "The students, teachers, parents and citizens in the South Routt School District are friends and neighbors. Many of my family members are graduates of the school. I ran for treasurer to represent and serve them. I do my best to represent and serve them every day. In doing so, though, I do not have free reign. I must follow Colorado law."

Routt County Commissioner Tim Corrigan, a former longtime South Routt school board member, said the district is being put in a unique spot.

"I think there's no question that the South Routt School District is in a difficult situation," Corrigan said. "The school district really needs to be proactive in taking steps to remain solvent. I think it's appropriate to push on the treasurer to try to find a solution for this."

To reach Teresa Ristow, call 970-871-4206, email tristow@SteamboatToday.com or follow her on Twitter @TeresaRistow