Question
A--common--practice--for--government--entities,--particularly--schools,--is--to--issue--short-term--(promissory)--notes--to--cover--daily--expenditures--until--revenues--are--received--from--tax--collection,--lottery--funds,--and--other--sources.--School--boards--approve--the--note--issuances,--with--repayments--of--principal--and--interest--typically--met--within--a--few--months.--The--goal--is--to--fully--cover--all--expenses--until--revenues--are--distributed--from--the--state.--However,--revenues--distributed--fluctuate--due--to--changes--in--collection--expectations,--and--schools--may--not--be--able--to--cover--their--expenditures--in--the--current--period.--This--leads--to--a--dilemmawhether--or--not--to--issue--more--short-term--notes--to--cover--the--deficit.--Short-term--debt--may--be--preferred--over--long-term--debt--when--the--entity--does--not--want--to--devote--resources--to--pay--interest--over--an--extended--period--of--time.--In--many--cases,--the--interest--rate--is--lower--than--long-term--debt,--because--the--loan--is--considered--less--risky--with--the--shorter--payback--period.--This--shorter--payback--period--is--also--beneficial--with--amortization--expenses;--short-term--debt--typically--does--not--amortize,--unlike--long-term--debt.--Based--on--this--information,--compose--a--paper--that--addresses--the--following: What--would--you--do--if--you--found--your--school--in--this--situation? Would--you--issue--more--debt?--Explain. Are--there--alternatives?--Explain. What--are--some--positives--and--negatives--to--the--promissory--note--practice?-- Please--explain--at--least--two--positives--and--at--least--two--negatives.
A--common--practice--for--government--entities,--particularly--schools,--is--to--issue--short-term--(promissory)--notes--to--cover--daily--expenditures--until--revenues--are--received--from--tax--collection,--lottery--funds,--and--other--sources.--School--boards--approve--the--note--issuances,--with--repayments--of--principal--and--interest--typically--met--within--a--few--months.--The--goal--is--to--fully--cover--all--expenses--until--revenues--are--distributed--from--the--state.--However,--revenues--distributed--fluctuate--due--to--changes--in--collection--expectations,--and--schools--may--not--be--able--to--cover--their--expenditures--in--the--current--period.--This--leads--to--a--dilemmawhether--or--not--to--issue--more--short-term--notes--to--cover--the--deficit.--Short-term--debt--may--be--preferred--over--long-term--debt--when--the--entity--does--not--want--to--devote--resources--to--pay--interest--over--an--extended--period--of--time.--In--many--cases,--the--interest--rate--is--lower--than--long-term--debt,--because--the--loan--is--considered--less--risky--with--the--shorter--payback--period.--This--shorter--payback--period--is--also--beneficial--with--amortization--expenses;--short-term--debt--typically--does--not--amortize,--unlike--long-term--debt.--Based--on--this--information,--compose--a--paper--that--addresses--the--following:
What--would--you--do--if--you--found--your--school--in--this--situation?
Would--you--issue--more--debt?--Explain.
Are--there--alternatives?--Explain.
What--are--some--positives--and--negatives--to--the--promissory--note--practice?--
Please--explain--at--least--two--positives--and--at--least--two--negatives.
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