SIDNEY — Bond refunding for Sidney City Schools was discussed in depth during Monday evening’s Board of Education meeting.
“The current bonds are for the middle school and high school construction/renovation,” said Treasurer Mike Watkins. “They are currently being serviced through 5/3rd Band. The rates are moving in a direction where we could do refinancing.”
Watkins said he interviewed three agencies about the bond refunding and asked Mike Burns, a director with Robert W. Baird & Co., to give a presentation to the board.
“The time is right to do refunding of the bonds,” said Watkins.
Burns, who is based in Columbus, said Robert W. Baird & Co. is located in Milwaukee, Wisconsin.
“I like to learn everything I can about my client before I come to their office,” said Burns.
The existing school improvement bonds, Burns said, were issued in May 1, 2001, and April 1, 2002. In October 2007, the district issued an advance refunding of the improvement bonds.
“In 2007, the banker met with the board to refinance the bonds,” said Burns. “The advanced refunding can be done before the call date, but you can only do it one time.
“After that you can do current refunding after that. This has to be done within 90 days of the call date of the bonds,” said Burns.
The call date for the bonds refunded in 2007, he said, is Dec. 1, 2017. The earliest the bond refunding could be done is Sept. 1, 2017.
The refunding opportunity, he said, will allow the district to:
• Currently refund the 2007 bonds.
• Maintain the tax-exempt status on the bonds.
• Maintain the same final maturity of the bonds of Dec. 1, 2028.
• Participate in the Ohio School District Credit Enhancement Program.
• Pursue underlying rating of the district.
The district, said Burns, currently has an “Aa3” and “A+” underlying bond rating. The district would have to decide if it wants to pursue one or both bond ratings going forward.
“We would use due diligence in the rating analysis,” said Burns. “You have done an excellent job monitoring the school district’s finances. You’ve lived within your means for six years. That’s very impressive.
“I have no concerns about you getting a strong bond rating,” he said.
The district, said Burns, has two options when considering the bond refunding.
Option 1, he said, is a level savings structure, where 100 percent of the savings flow back to the taxpayers in the form of a bond millage reduction.
Option 2, is an upfront savings/transfer savings to the permanent improvement (PI) fund. It would save the taxpayers approximately $2.1 million over the life of the bond issue and reduce the millage by .4 mills. The potential annual cash savings to taxpayers beginning in 2018 would be $190,253,
With option 2, said Burns, the district would retain a portion of the savings and transfer it to the PI fund for two years. Then the district would reduce the millage to the taxpayers.
The money placed in the PI fund, said Burns, can’t be used for salaries or operation of the district.
“This is a win/win for the district,” said Burns. “You get to keep funds for the PI fund and give a refund to the taxpayers.”
Option 2 would save the taxpayers $1.9 million and deposit approximately $1.5 million into the PI fund in 2017 and 2018. The estimated millage reduction from 2018-28 would be .08 mills.
Option 2, said Burns, would have to be approved by the Shelby County Budget Commission, which is composed of the county treasurer, county auditor and county prosecutor.
“This school district is a very affordable district to live in,” said Burns. “Your weakness is your wealth and taxes. Another weakness is your open enrollments (loss of students). It’s very strange how your district is shaped. I think a lot of your open enrollments out for convenience sake.
Burns said when the meeting is held with the budget commission, a list of projects will have to be given to show the commission the district’s need for PI funds.
“As we look at the projects that we could undertake and will undertake, what you present us with is a win/win,” said Superintendent John Scheu. “It’s a win for the school district. It’s a win for the taxpayers. We will be able to do the projects in the district.”
“We can do this (option 2) and it won’t cost the taxpayers anymore money,” said Burns. “If it (option 2) doesn’t happen, then you’ll have to go back to the taxpayers and increase taxes.”
Burns recommends holding a public hearing/meeting to explain the options to district residents.
“Are there any cons,” asked board member Chip Hix.
“They only con would be the superintendent’s time for the project. And the treasurer’s time,” said Burns.
“I like option 2,” said board President Bill Ankney. “We’re not asking for more money. We’re redistributing what we already have.”
Following the discussion, the board approved a resolution providing for the issuance of of school improvement refunding bonds not to exceed $15,515,000.
“At this time, it makes sense to refund the bonds,” said Watkins.
Reach the writer at 937-538-4822.