- Associated Press - Thursday, July 7, 2016

DENVER (AP) - A tiny school district caught up in a giant coal company’s financial woes got a million-dollar bailout Thursday with a vote by the Colorado board of education to empty its emergency fund to help.

South Routt County schools officials had turned to the board after Peabody Energy, which owns Twentymile Coal Company in the county, failed to make a property tax payment last month. Peabody filed for bankruptcy protection in April.

A state education department official told the board shortly before Thursday’s 7-0 vote that reserves are held for situations like the plight of the northwestern Colorado district, which has 300 students. The department will now ask the state legislature to replenish the $1 million contingency fund. South Routt will be expected to repay the money if Peabody pays its taxes.

The nation’s largest coal producer provides 40 percent of the revenue raised locally to help keep South Routt’s one elementary, one middle and one high school running, Superintendent Darci Mohr told The Associated Press.

Leanne Emm, who supervises the Colorado Department of Education’s school finance team, told AP that while other districts have in the past faced similar problems stemming from taxes not being paid, she had never before seen one facing the loss of such a large portion of revenue.

Speaking to the board Thursday, Mohr had described the shock of learning Peabody had not paid its taxes just as she was finalizing her budget for the next school year. But she had also tried to reassure worried parents that a solution would be found.

“It was too early to panic,” she said in an interview after the voted. “But we couldn’t ignore it either.”

The district had put its shortfall due to uncollectable taxes at more than $1.3 million in total for this fiscal year and next. That means that with the $1 million from the state, Mohr is still more than $300,000 short. She said she hoped to find savings as the year progresses or look to private donors or other funding sources.

South Routt schools took the biggest hit from the missed tax payment, but hospital, fire department and other operations also suffered, Tim Corrigan, a Routt county commissioner, told AP. He said the county was dipping into its own reserves to help.

Corrigan added that he expected Twentymile Coal and a nearby power plant it supplies to keep operating despite the parent company’s troubles. He also said he was confident Peabody would eventually resume meeting its obligations and pay back taxes.

In a statement to the AP, Peabody said its tax bill “will ultimately be subject to a final plan of reorganization and court approval, and we will work with local officials to maintain communications and manage expectations as we move forward through the Chapter 11 process.”

Peabody had followed Arch Coal, Alpha Natural Resources and others into bankruptcy proceedings as new energy technology and tightening environmental regulations led to mine closures and job cuts.

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