West Bend board approves proceeds manager after $80 million bond sale; district earned lower interest rate than projected

The West Bend Joint School District Board on April 14 heard an update on the district’s recent bond issuance and voted to designate American Deposit Management (ADM) as the authorized agent to manage the proceeds from an $80,000,000 bond sale.

The presentation, led by Assistant Superintendent Lenny Hansen, said the district’s bonds were sold at a 4.42% interest rate — below the district’s earlier planning estimate of 4.75% — which Hansen described as “substantial savings to our taxpayers in interest payments over the life of the bonds.” Hansen also told the board that the district’s credit rating was upgraded by S&P from “AA-” to “AA,” a change he said puts the district among the top-rated school districts in the state.

Hansen summarized the administration’s recommendation to use a combination strategy: placing a portion of proceeds with the district’s bank (to capture negotiated rates) while contracting ADM to advise on a laddered investment plan and to manage arbitrage risk. He said ADM will also provide a secure vendor payment service for disbursing large construction payments and will monitor investment performance daily. Hansen said the district negotiated directly with its bank to reduce the fees ADM would collect; he estimated ADM’s fee under the recommended strategy “is gonna be just a little bit over $20,000” rather than the $150,000+ fees common in some proposals.

Board members asked about ADM’s fee structure and the reasons to hire a proceeds manager rather than manage all proceeds internally. Hansen said the firm’s principal value is ongoing arbitrage monitoring and coordination across accounts during a multi-year construction program, and that ADM will not receive a fee for amounts placed directly with the district’s bank under the negotiated arrangement.

The board adopted a resolution naming American Deposit Management as the bond proceeds management agent. The motion carried with six ayes and one abstention; Board Member John Donaldson was recorded as abstaining. The board president moved the resolution; the second was recorded but not named on the public record. Hansen said the closing and receipt of proceeds were scheduled for Wednesday following the meeting.

Hansen cautioned that proceeds interest must be used toward debt repayment or project-related costs and cannot be diverted to general educational uses. He also said the district still expects to sell an additional roughly $26 million in bonds next year and will seek similarly favorable results.

The board discussed next steps including beginning coordination between ADM and the district’s bank immediately upon receipt of proceeds and preparing to manage arbitrage liabilities during the construction timeline.