Lindbergh School District officials saved district taxpayers nearly $677,000 by seeking bids for the sale of $10 million in general-obligation bonds to fund Proposition R 2008 projects.

District voters in November approved Prop R 2008, a $31 million bond issue. The measure received 20,378 “yes” votes — 72.4 percent — and 7,770 “no” votes — 27.6 percent. A four-sevenths majority was needed to approve the measure, which will not increase Lindbergh’s debt-service tax rate, but extend the current rate of 38 cents per $100 of assessed valuation an additional five years.

Nine bids were submitted to purchase the first $10 million installment of Proposition R 2008 bonds, and the school board approved a resolution authorizing the sale of the bonds to Robert W. Baird & Co. Inc. of Red Bank, N.J. Robert W. Baird & Co.’s true interest cost of 4.557 percent was the lowest of the nine bids submitted, according to Chief Financial Officer Pat Lanane and the district’s financial adviser, Joy Howard of WM Financial Strategies. Morgan Stanley & Co. Inc.’s true interest cost of 4.941 percent was the highest of the nine bids.

The difference between the lowest and highest bid “is huge,” Howard told the Board of Education March 10, the day of the bond sale.

“… It was a wonderful, wonderful sale …,” Lanane told the board. “It absolutely verifies and confirms to us that an open, competitive sale of bonds is the only way to go on general-obligation bonds. Ninety percent of the school districts in this state do what’s called a negotiated sale …

“We had nine bidders today. They would simply preselect one of those. Sit down with them and work out the best deal they think they can work out. I don’t like it. I think having this out —an open — let anyone who’s in the market (who) wants to come and bid, I think that creates a much better competitive atmosphere. We’re going to show you some numbers that we think absolutely prove that to you.”

Howard said, “… With the nine bidders, the difference between the lowest bid and the highest bid was over $676,000, which is amazing. I mean more than a half a million dollars — a lot more than a half a million dollars — of savings as a result of the competitive sale. And if you weren’t doing a competitive sale, the kind of results that you could get very well could be worse than the worst bidder because all these firms wanted to bid. All these firms sharpened their pencil.

“But if a firm just gets picked and they know that they don’t have to do a competitive bid, they’re not going to be as good as any of these necessarily,” she added.

Noting the difference between the highest and lowest bid totals $676,916.80, Lanane asked, “Who gets that savings? The taxpayers get that savings. This is $676,000 of interest less that they will pay because we had this bidder here come to the table today. If you were just to go off somewhere and negotiate that … you could even be worse. This number could actually be higher than that because if they’re going to negotiate a deal with you weeks ahead, they have to hedge it. They have to put a factor in there to make sure they don’t come up short on this. So it just very much confirms that it was a good idea. The other thing that is just absolutely wonderful is the number of bidders.”

Howard interjected, “Which is a big surprise in today’s market. With the credit crunch, to have this many bidders — I was calling a lot of firms and hoping to get many bids, but this was a big surprise.”

Lanane said, “… I’ll give Joy some of the credit and I think the other part of the credit goes to the board because of the fiscal policy that we’ve had that’s put us in such good shape that when people look at our Aa2 (bond) rating … they say: ‘Wow. That is a very good piece of paper for us to buy and hold.’ And so I believe it’s a testament to that as well.”

Howard said, “It absolutely is a reflection. There’s nothing that I could do to overcome a bad rating. But with a good rating, the thing I do is to try and make sure a lot of firms know about the sale coming up and make sure the bids come in. But I can’t do anything for a bad rating …”

The Board of Education had placed Proposition R 2008 on the ballot with the goal of providing a long-term solution to space concerns at Sperreng Middle School.

More than 1,300 sixth-, seventh- and eighth-graders are jammed into the middle school that was designed to accommodate 800 pupils when it opened in 1970.

While Sperreng will remain a sixth- through eighth-grade middle school, funds from Prop R 2008 will be used to convert Truman Elementary School to a sixth- through eighth-grade middle school, add onto Crestwood and Long elementary schools, convert Concord School to an elementary school and construct a new Early Childhood Education building next to the Administration Building.

In a separate matter March 10, the Board of Education voted to adopt a revised operating budget for the current school year.

The Board of Education traditionally adopts a revised budget at its December meeting, but Lanane told the board Dec. 9 that he intended to propose some reductions before presenting a revised budget for the 2008-2009 school year.

The school board voted June 10 to adopt an operating budget for the 2008-2009 school year that projected expenditures of $62,533,514 with anticipated revenue of $59,246,460 — a deficit of $3,287,054.

Despite the projected deficit, the district would not go into the red, but planned to dip into its reserves projected at roughly $25.6 million at that time.

However, because of a decline in revenue and an increase in expenditures, that projected deficit had increased to roughly $4.3 million by December. Though Lindbergh faces financial challenges as a result of the current economic recession, district officials said the reserves are the reason why the situation is not a crisis at this point. In fact, those reserves have enabled district officials to pledge not to seek a tax-rate increase for the next 24 months.

But as part of a four-phase strategic financial plan, district officials want to limit the draw down of reserves to no more than $3 million per year.

The revised operating budget adopted by the board reflects midyear cuts totaling $1,343,577.

Among those midyear cuts are a 35-percent reduction in supply, equipment, furniture and purchased services budgets that totals roughly $860,000, the elimination of a driveway project at Sperreng Middle School that would have cost $266,000 and the cancelation of a special fields project that would have cost $175,000.

The revised 2008-2009 operating budget projects expenditures of $61,592,086 with anticipated revenue of $58,589,575 — a deficit of $3,002,511. Despite the projected deficit, reserves totaling nearly $24 million are projected at the end of the current school year.