A combination of quality planning and good luck will benefit the students and taxpayers of Colusa Unified School District. Bonds authorized by an overwhelming majority of the voters back in November went to market on April 16th. The sale resulted in higher than expected funding for the district, lower than expected costs, and significant savings for the district’s taxpayers.
Lorie Raineri, President of Government Financial Strategies (GFS), presented the final numbers to the CUSD Board of Trustee’s at Tuesday evening’s regular meeting. Ms. Raineri’s detailed and lively presentation was met with applause from the board and audience at several points. GFS was hired by the Board in 2013 to guide the district through the process of analyzing, preparing for, and executing a successful bond program.
The District sold $5,900,000 in bonds to well-known investment bank, Piper Jaffray, after a highly competitive bid sale. GFS oversaw bidding from six different investment firms, an unusually high number of bidders for a relatively small amount of bonds. The fierce competition for these bonds drove the bidding to unusually low rates which resulted in significant savings for the taxpayers. The Piper Jaffray bid was $17,000 lower than the next closest bid, and a remarkable $280,000 below the highest bid. “Those numbers represent savings to the taxpayers, and reflect the success of GFS’ efforts to create a high demand, competitive bid process,” commented Ms. Raineri.
Piper’s low bid of 3.35% was actually below the market index, a measure of the average interest on current market bonds.
A combination of the rebounding economy and sound fiscal planning resulted in even greater savings for the taxpayers. Assessed value of properties in the school district turned out to be higher than expected due to the rate of the nation-wide economic recovery. Shortening the term of the bonds by 7 years resulted in an amazing $3.9M savings to the taxpayers. “Decreasing the term of a bond saves taxpayers money, just as shorting the term of a mortgage saves money for a homeowner,” Raineri explained. Additionally, the amount of tax per $100,000 of assessed value dropped from an early estimate of $47.55 to a surprising $42.90. Which means that taxpayers will pay less than they expected to pay at the time of the bond election. “I’m really pleased that we are able to get the money our schools need for modernization, and save on taxes at the same time,” said CUSD Board of Trustees President Lincoln Forry.
The competitive bond sale and some savvy business dealing by GFS resulted in a lower than expected cost of issuing the bonds. Initially, GFS estimated that the costs and fees would reduce the bond proceeds to $5.45M, a cost of $455,000. After all the deals were complete and agreements signed, the district only paid $185,000 to issue the bonds. The bonds also sold “at a premium” which means the district will receive $5.8M in proceeds, an additional $355K over initial estimates, money which can be spent on much needed repairs and renovations.
Raineri’s presentation capped nearly two years of work by the district to secure bond funds for modernization of CUSD’s aging infrastructure. The bond funds will be combined with district reserves and Proposition 39 funds to make just over $7.2M available for school repairs and upgrades. Superintendent Dwayne Newman added, “Our board did a great job of insuring that GFS understood our needs, and our philosophy of fiscal conservatism. This is a good start, and will do some much needed work, but remember that our facilities assessment identified over $35 million in needed repairs and modernization. We’re really pleased and fortunate that everything worked out so well. Our taxpayers benefitted, our community will benefit, and our students will certainly benefit from this project.”