GETTING BACK ON TRACK

The Bond needs to be voted down in November and elect 3 new members to the School Board that are more fiscally responsible. They will only listen with your votes.

Demand that more community input is asked for in the form of: 1) online surveys sent to all and 2) more public sessions with a Q&A format are done throughout the year.

The school board needs to present a full accounting of what we said we were going to do versus what we did. We already know the school district overspent on the District Office Remodel (~$600K+) and High School #2 site (paid $6.5M vs $2.45M budgted).

The school board needs to present a full disclosure of our principal, interest, and cash flows. How much have we paid in fees? How much has the underwriter been compensated?

The new School Board needs to address the audit reports regarding internal controls, budget expenditures, and a competent accountant or financial officer to stay compliant.

The school needs to work with a financial advisor on how to restructure our debt so that we are paying down principal as quickly as possible. This will be limited as some bonds cannot be refinanced for a period of time.

The School Board needs to put underwriting services out to bid.

The School Board needs to adopt policies or a binding resolution on our school bond financing. Our debt is big enough and we have a good credit rating. Below are some best practices from other states and school districts.

BEST PRACTICES

Must obtain the services of a financial advisor who is independent from the underwriting function, regardless of the method of sale used.
Utilize the competitive method of sale when issuing General Obligation bonds, particularly since we have a good credit rating.
Long-term debt will not be used to finance current operations or to capitalize expenses. The school district will avoid the use of long-term debt to finance facility maintenance, repairs, recurring equipment purchases, and other items traditionally funded in the annual operating budget. The capitalization of expenses—that is, the shifting of operational costs, facility maintenance, and repair onto long-term debt—is a classic pitfall of government finance. The practice should be expressly prohibited.
The school district will retire fifty percent of the total principal outstanding for general obligation debt within ten years of the date of issuance. This policy encourages repayment of debt in the shortest possible time without creating undue hardship for the taxpayers.
The school district will use only level or declining debt repayment schedules; it will not use back-loaded or ballooning repayment schedules or variable-rate debt. When a bond issue for a capital project includes the purchase of technology, equipment, or other items having a shorter life expectancy than the capital project, then debt repayments for the capital project will not be deferred but rather made on a level or declining repayment schedule.
The school district will avoid borrowing from the School Bond Loan Fund.
The school district will not issue refunding (refinancing) bonds for the purpose of interest rate savings unless net present value savings exceed three percent of the par value of the proposed new bonds. Three to five percent is the range for typical savings thresholds.
Debt will be issued through the competitive bidding process except as expressly approved by resolution of the school board. If it is proposed that debt not be issued through competitive bidding, the resolution will state the compelling reasons why the competitive bidding process is not deemed suitable for the particular issuance of debt. Competitive bidding can reduce interest costs. It avoids questions of unfairness and favoritism in the debt underwriter selection process. General obligation school bonds are typically not so complex, and marketing or timing considerations not so critical, as to warrant anything but competitive bidding for most bond issues.
Debt will not exceed a cap of X% outstanding principal debt / total valuations and X% total outstanding debt / total valuations. If cities are capped at 5%, we should be close.
Any New Bond Issues will be monitored by the board and a public oversight committee. Progress and current status will also be maintained and viewable online to the public. This is a best practice that was implemented by Omaha Public Schools. Click here to read more about their oversight committee.