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Socorro ISD board approves $35.145 million tax and revenue anticipation note to bridge state funding gap
Summary
The Socorro ISD Board of Trustees on May 5 approved a resolution to issue a $35,145,000 tax and revenue anticipation note to JPMorgan Chase at an interest rate of 3.597% to provide short-term cash while awaiting state and local revenues.
EL PASO — The Socorro Independent School District Board of Trustees on Monday approved issuing a $35,145,000 tax and revenue anticipation note to JPMorgan Chase Bank to cover operating needs while the district awaits state funding and tax collections.
David Solis, the district's chief financial officer, told trustees the board would approve the note and close on it June 4 so the district would receive funds that day. Solis said the most favorable bid came from JPMorgan Chase at an interest rate of 3.597 percent and that the total debt service through the note's Feb. 2 maturity is projected at $35,998,312.
The financing, presented by the district's financial advisers, McCall Parkhurst & Horton, and investment banking representatives, is intended as a short-term bridge while the district awaits state revenue and local tax collections. "We feel it's very reasonable and favorable for the district," said Dr. Miguel Reyes of the financial advisory team.
In a summary of the district's debt profile, Solis said Socorro ISD currently carries no general long-term debt on the maintenance and operations side and that existing debt is voter-approved (interest and sinking) indebtedness. The district's ratings were noted as Moody's A2 and Fitch A-; Solis and advisers warned that some bid terms include clauses tied to ratings. "If the district were to go below that rating down to a triple B plus, they would consider that as a clause in order to increase that rate by 4 percent," a member of the financing team said.
Board members asked about the need to repeat this short-term borrowing in future years if state revenues do not change. Solis said the district would likely repeat the practice if it does not receive additional state revenue or increase its tax levy. "I anticipate if we do not receive any new revenue either from the state or say additional increase in taxes... this would be a reoccurrence," Solis said.
The board voted to approve the resolution, the note purchase agreement and related documents authorizing issuance and sale of the Tax and Revenue Anticipation Note, Series 2025, in the principal amount of $35,145,000 to JPMorgan Chase Bank, National Association at the interest rate of 3.597 percent. Trustee Mrs. Macias made the motion to approve as presented; Mr. Guerra seconded the motion. The board approved the motion.
Solis provided a sources-and-uses breakdown during the presentation: projected project fund dollars of $35,000,000, a projected cost of issuance of $145,000, and that any excess would be returned to the district. The advisers noted many districts across the state are using similar short-term financing while waiting on state disbursements.
The board did not record a roll-call tally in the public minutes beyond the stated motion, second and vote to approve. JPMorgan's bid beat offers from PNC and Texas Capital Bank, the district said.
Trustees and staff said they will continue to monitor the district's fund balance, state funding developments and long-term fiscal planning as they prepare the 2025–26 budget.
