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Financial adviser outlines plan for next bond installment; district could retire $10–$17M principal immediately
Summary
Brian Grubbs, the district’s financial adviser, told the Sherman ISD board the district’s strong tax base and I&S cash could let it retire $10–$17 million of principal at the outset of the next bond installment, lowering long‑term interest costs.
Brian Grubbs, the district’s financial adviser, gave trustees a preliminary plan for issuing the next installment of bonds approved in a prior election and described options for using the district’s existing interest‑and‑sinking (I&S) fund balance to reduce long‑term borrowing costs.
Grubbs told the board the district had applied for and received the permanent school fund guarantee, which will make the next issuance triple‑A rated; his presentation showed Sherman ISD’s underlying ratings as double‑A categories by the major ratings services. He said audited I&S fund balances and projected collections would allow the district to apply a sizable principal reduction in year one of a sale.
“Based on the cash flow and our assumptions, you literally could apply up to $17 million of your existing I&S funds to pay down principal early on your next series of bonds,” Grubbs said. He added a working illustration that applied $15 million in I&S cash to year‑one principal retirement and used a 4.5% assumed interest rate in the illustration.
Trustees asked whether the district should wait for lower interest rates. Grubbs said staff will monitor market conditions daily and that the order the board considers authorizes the district to move forward with an issuance over the next 12 months, but no final lock‑in occurs until the district chooses timing after receiving preliminary certified values and confirming construction cash needs.
Why it matters: applying I&S cash to retire principal reduces total interest paid by taxpayers over the life of the issue; the scale of savings depends on the amount applied and the district’s certified property values. Grubbs said larger certified values could allow even greater principal reduction in year one.
No formal vote to sell bonds was recorded during the meeting. Grubbs said the team will return with a final structure after the district receives preliminary April values and the board confirms construction draw needs.
Ending: Grubbs told trustees the next steps are to review preliminary certified values when they arrive, finalize construction funding needs and choose a market window to issue bonds if the board decides to proceed.
