Taxpayers could save $900,000 with Lindbergh bond refunding

School board to eye approval of ballot language for tax hike.

By MIKE ANTHONY

A proposal to refund general obligation bonds issued in 2001 by Lindbergh Schools is expected to save district residents nearly $900,000, according to Chief Financial Officer Pat Lanane.

A resolution authorizing the hiring of a financial adviser and bond counsel to initiate the refunding process was scheduled to be considered by the Board of Education Tuesday night — after the Call went to press. If approved, WM Financial Strategies would serve as financial adviser to the district while Gilmore & Bell would be bond counsel.

As proposed, Lindbergh would sell more than $8.59 million in general obligation bonds to refund the bonds issued in 2001.

“We think the timing is great. While there’s a lot more down side to a recession like this than there is up side, there are a few things like construction bids and refunding of old series of bonds issued when the interest rates were higher that are very positive, and this is one of those …,” Lanane told the Call last week.

In a memorandum to Superintendent Jim Simpson, Lanane wrote, “Refunding can occur only one time and no sooner than 90 days before the call date of the bonds. This means the competitive sale of bonds to refund will not occur before Dec. 1, making the December BOE (Board of Education) meeting the meeting at which the sale will be approved by the BOE.”

In the memo, Lanane also wrote, “We will need to make it perfectly clear that this refunding does not result in the district gaining any money either for operations or construction — all savings go directly to the taxpayers in the form of lower debt payments.”

If the bonds were refunded today, district taxpayers would save $891,744, according to an analysis prepared by Joy Howard of WM Financial Strategies.

Howard also prepared a second scenario based on a half-point increase in interest rates, “which in this environment would be a lot,” Lanane said. Even with a half-point increase in interest rates, the savings to district taxpayers by refunding the bonds would total $628,000.

With the potential savings ranging from nearly $900,000 to a worst-case scenario of more than $600,000, Lanane said the decision to proceed is an easy one.

“Heck, it’s a no-brainer as far as we’re concerned,” he said. “Not only do we want to do it, we’re eager to do it because I love it when you can do something like that.”

Timing the refunding of bonds sometimes is “a little bit of a guessing game. But of the ones I’ve ever done, there was the least guessing I had to do on this one of any because I do think given another year or two or three, rates will actually go up and it won’t be as attractive then,” the chief financial officer said.

In a separate matter Tuesday night, the Board of Education was scheduled to consider approval of the ballot language for a 65-cent tax-rate increase that will appear on the November ballot.

Board members voted in June to place the tax-rate increase on the Nov. 2 ballot.

If approved by voters, Lindbergh’s operational tax rate would increase to $3.40 per $100 of assessed valuation from the current rate of $2.75. The district’s total tax rate would increase to $3.81 per $100 from the current rate of $3.16. But district officials have said that even with the increase, Lindbergh’s tax rate still would remain among the lowest in St. Louis County.

A 65-cent tax-rate increase would cost the owner of a $200,000 home an additional $247 per year and the owner of a $100,000 home an additional $124 per year, according to information presented to the board June 8.

If approved, the tax-rate increase would generate more than $8.3 million beginning with the 2011-2012 school year.

The school board’s decision to place the tax-rate increase before voters comes after making $4.7 million in cuts for the 2010-2011 school year and roughly $2 million in cuts for the 2009-2010 school year. For the coming school year, 60 positions were eliminated, including 45 teaching positions.

But even with the $4.7 million in reductions, the school district still faces a nearly $4 million budget shortfall.

As proposed, the tax-rate increase would be called Proposition L.

The proposed ballot language states, “Shall the school board of the Lindbergh Schools be authorized to increase the operating tax levy for operating purposes by 65 cents per $100 of assessed valuation? If this proposition is approved, the adjusted operating levy of the school district is estimated to be $3.40 per $100 of assessed valuation.”