Santa Clara Unified reports $190 million Measure BB bond sale with lower interest costs and taxpayer savings

Santa Clara Unified School District officials reported that a Sept. 3 sale of $190 million in Measure BB bonds drew an unusually strong field of 11 bids and produced lower-than-expected interest costs that the district says will reduce long-term debt service and free more funds for facilities work.

The district’s presentation said both major credit-rating agencies — S&P and Moody’s — assigned the district AAA ratings, which the presenters and trustees credited as a major factor in the low interest outcome. Morgan Stanley submitted the winning bid with an interest rate a little over 2 percent, well below the 4 percent the district had budgeted as a conservative scenario.

District staff and outside consultants told the board the bond sale produced several fiscal benefits: an underwriter discount and fees below budget (about $1.9 million in savings against plan), a premium placed into an interest-sinking fund of roughly $13 million, and about $189 million available for facilities projects (approximately $1.9 million more than the district had estimated). The district summarized the combined effect as roughly $21 million less in net debt service versus prior estimates and banked additional project funding for school improvements.

Chief business official Mark Shields clarified a figure discussed during the presentation: the presentation referenced $420 million in cumulative savings related to measure planning; Shields said that the approximately $422 million figure discussed referred specifically to projected principal-and-interest costs for Measure BB compared with earlier 2018 estimates (the district had budgeted $1.45 billion of principal and interest for Measure BB and now expects about $422 million less than that projection).

Trustees and labor and finance partners congratulated district finance staff and the bond-team consultants. Trustee Jim Canova said the final chart showing “how much more went to infrastructure and how much was saved for taxpayers” should be widely shared; Trustee Andy Rotterman and Trustee Vicky Fairchild echoed thanks to staff and the consultants.

The district said funds from this issuance were received on Sept. 18 and are available to spend on the Measure BB facilities program; staff said they remain on track to complete the projects promised to voters and may be able to shorten the term of the tax levy because collections are below the maximum estimate.

The board did not take a final action on the presentation itself; the item was presented for information and trustees asked for publication-ready material summarizing taxpayer savings.