January 27, 2010 – Mayor Domenic J. Sarno announced today that the State will forgive $11 million of the City’s loan repayment obligation under a tentative agreement reached with the Patrick/Murray Administration and the State Office of Administration and Finance.
State legislation passed in June 2009 had extended the time the City had to repay a $52 million no-interest state loan. The Commonwealth, like cities and towns across Massachusetts, has been faced with significant budget obstacles and the Fiscal Year 2011 State Budget is extremely tight. Springfield Mayor Domenic J. Sarno had begun to receive information from members of the Western Massachusetts Legislative Delegation that there was talk at the State House about monies that had been set aside in the Springfield Promise Program Trust to be used as a way to help close the state budget shortfall. The Patrick Administration had also reached out to Mayor Sarno to determine whether an agreement could be reached to restructure the loan repayment.
Mayor Domenic J. Sarno stated “based on the information that I was receiving I did not want to run the risk of having the State request payment in full on our entire loan obligation.” “Receiving such a request from the State would have been detrimental to the City’s improved financial status,” stated Sarno. “I also did not want to jeopardize the continuation of the Springfield Promise Program which plays a vital role in helping to address poverty and social issues through education,” added Sarno.
Under the terms of the tentative agreement announced today:
- The City of Springfield will promptly repay $23 million of the state loan by using funds held in the Promise Program Trust;
- $11 million of the loan will remain in the Promise Program Trust to fund scholarships for City students and will be forgiven by the State; and
- The remaining $13 million of the loan will continue to be held in the Program’s Trust to repay the City’s remaining loan obligation to the State and the City will continue to use the interest earned on this money to fund additional scholarships for Springfield students.
“Prior to reaching this agreement I wanted to confirm that the City would receive proper Chapter 70 (schools) and local aid funding for the upcoming fiscal year,” said Sarno. “I am extremely thankful to Governor Deval Patrick and Lt. Governor Tim Murray’s willingness to work out this agreement with the City,” stated Sarno. “I am also thankful to the Western Massachusetts Legislative Delegation for their lobbying efforts on behalf of Springfield,” added Sarno.
Mayor Sarno also urged the Patrick/Murray Administration to use the $23 million early loan repayment for projects and line items that benefit Springfield and its surrounding communities. “The City would be well served if the Governor’s budget included an additional appropriation for the Hampden County District Attorney’s Office to assist with crime fighting measures,” stated Sarno. “It is also my desire to see the Governor’s budget allow additional funding for the UMass Amherst/Springfield Economic Development Partnership,” added Sarno.