Bonds 101 educates school board on election
Training on the details of a bond election was presented by Todd Snidow, managing director of Stifel Public Finance Company, for the Holyoke School District Re-1J board at its Sept. 1 meeting.
The school district will place Ballot Issue 5A on the Nov. 3 ballot, seeking general obligation bond indebtedness up to $2.2 million. This matching money will pair with a $2.53 million Building Excellent Schools Today grant for a $4.7 million project.
Details of the project include secure entry, student safety and access improvements to address existing deficiencies in the JR/SR high.
Looking at a 10-year bond debt, the district is asking for a property tax increase to generate up to $265,000 annually.
Each December, a mill levy will be set, based on that year’s assessed valuation and how much each mill will generate in revenue.
Snidow explained that a municipal bond is a debt security issued by agencies to finance public-purpose projects such as schools. It is a mechanism for obtaining money today.
There is a promise to repay the money on a certain date with interest at a specific rate and from specific revenues.
Snidow said the good news is that in the current market, interest rates are very low.
While there isn’t a huge return on bonds, Snidow explained that investors like them because they don’t have to pay income tax on the interest. So purchasing these bonds is a great way to produce tax-exempt income. It’s a very well-established, safe investment, he added.
If Ballot Issue 5A passes, Holyoke School District would issue the bonds and give them to the underwriter (Stifel Public Finance Company) for sale to the bondholders. Stifel would sell the bonds and receive proceeds from the sale.
Those bond proceeds would be sent to the trustee/registrar, who would in turn pay the bondholders their ongoing principal and interest payments. The school district would also remit ongoing security payments to the trustee/registrar.
Once a bond ballot issue is approved, bond counsel helps put a prospectus together and prepares an official statement that gives information about the local economy, as well as terms and dates for the bond.
The underwriter structures the financing and finds the very best interest rate possible, while the underwriters’ counsel prepares the bond purchase agreement.
Looking at the best potential timing for selling the bonds if the ballot issue is approved Nov. 3, Snidow said information could be prepared by December, but they could also look at opening the bond sales in January, depending on interest rates.
Because Colorado school districts benefit from the state’s Intercept Program, which is rated Aa2/AA, Snidow anticipates the district would be in the high investment grade for credit quality.
He pointed out that there is only one school district in the state that is at the very highest AAA credit rating, and that is Cheyenne Mountain in Colorado Springs. A higher credit rating results in lower interest rates.
“You’ve been very, very good stewards of your taxpayers’ money and have set money aside each year,” Snidow praised the local district.
“So based on statements we’ve seen, you have sufficient moneys in your current bond account that if voters were to approve a new bond this fall, you could take money you have in the bank and repay the last couple of years of your last bond early — saving taxpayers a bunch of money,” Snidow added.
The last bond was for the new junior high addition at the high school 21 years ago.
Snidow emphasized the importance of educating the community about the bonds and making sure there are people in the community who are willing to advocate for the bond initiative to help promote it among the voting public.
In board discussion later in the meeting, Superintendent Kyle Stumpf noted that there are a lot of things looking very positive for this bond. He emphasized the importance of getting the word out to the community. The board will be looking for volunteers to assist with the bond promotion.
Next up on the election calendar is the Sept. 18 deadline for submitting ballot issue pros and cons for the ballot information booklet (blue book). Stumpf said they are working with bond counsel to prepare that information.
Full back-to-school reports scheduled for next meeting
While detailed back-to-school reports by building principals are scheduled for the Sept. 15 board meeting, Elementary Principal Andrea Kammer shared some of the positive things from the start of school at last week’s meeting.
She reported that staff debriefed Friday, Aug. 28, at the first early-release Friday of the year in which students were dismissed mid-day. She said they appreciated the time to reflect and debrief so early after the start of school.
Additionally, Kammer said staff feels technology is working well, morning check-ins are running smoothly, and the cellphone policy established at the JR/SR high is going well. “We have the support of families,” she pointed out.
In other business Sept. 1, the school board:
— Heard from Family, Career and Community Leaders of America officer LorenJo Oberle who offered the local group’s services and asked for board support.
— Approved nonresident student applications and transportation requests for Ryan and Adrianna Chaney from the Haxtun school district.
— Noted board appointments to shared leadership committees as follows: Summer Maloney and Dusty Sprague, standards of excellence; Sprague, leadership; Jon Kleve, budget and finance; Maloney, wellness; and Kleve, Colorado Association of School Boards’ delegate.
— Noted other assignments, including vocational committees: Chas Lengfelder, BOCES board, business advisory and scholarship committees; Justin Clayton, ag advisory; and Maloney, family and consumer science advisory.