STATEHOUSE (Jan. 24, 2011) - State Sen. Brandt Hershman (R-Lafayette) and fellow members of the State Budget Committee gave final approval today on loan requests from two Howard County school corporations affected by Chrysler Corp.'s bankruptcy status.
Hershman said the committee approved five-year loans at an interest rate of 2 percent in the amounts of nearly $1.5 million for Kokomo-Center Township Consolidated School Corp. and approximately $1.6 million for Northwestern School Corp.
"Members of the State Budget Committee understand that these funds are vital and both school corporations need this money to keep operating," Hershman said. "Thankfully, there were safeguards in place enabling us to tap into other resources and cope with this situation."
Hershman said the loans will come out of Indiana's Rainy Day Funds. He said the Howard County schools were in need of assistance because of delinquent tax payments by Chrysler Corp. Under bankruptcy agreements, the money will not be paid back in full until November, 2015.
Throughout the next five years, Hershman said Chrysler will re-pay both schools nearly $2.4 million each. He said Kokomo-Center will receive payments of $230,657 each May and November. Northwestern will receive payments of $232,955 under the same time frame.
In 2009, Hershman and State Sen. Jim Buck (R-Kokomo) included amendments in the state budget making loans available to Howard County through the state's budget reserves for taxing districts affected by the loss of Chrysler's property tax payment.