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East Grand Forks board authorizes bond sale after Ehlers reports roughly $299,000 in interest savings
Summary
The school board authorized a bond sale after Ehlers reported a successful auction with 13 bidders, Jefferies submitting the winning bid, and more than $299,000 in estimated interest savings that will reduce levies by about $40,000 a year for seven years.
The East Grand Forks Public School District board voted Jan. 29 to authorize the sale of bonds after a sale-day report showing strong market interest and significant projected savings.
Aaron, an Ehlers representative who presented the sale-day report, said the district drew 13 bidders and received the lowest bid from Jefferies of New York. "We actually, we're just short of $300,000 over $299,000 in, interest savings," he told the board, and said the savings will begin with next year’s levy cycle. Aaron added that the underlying rating for the bonds was "an A plus" and that the state’s credit enhancement (the state is AAA) bolstered the district’s borrowing costs.
The nut graf: the board’s action authorizes the district to proceed with the bond closing and locks in the sale-day rates; the district’s finance advisers said the result should lower levy-supported interest costs and that those levy reductions must be applied to future levies rather than general fund operations.
Board members questioned how future debt issues could affect the district’s rating. The treasurer/finance presenter noted the district is "about 50% of the way through the year" financially and warned that the district’s cash position "is down" and will be monitored to avoid erosion of fund balance that could lower future bond ratings. Aaron told the board that a downgrade from A+ to A or A– typically changes interest rates by roughly 5–10 basis points, which can compound over multi-year debt service schedules.
Acting Chair (name not stated) called for the motion to authorize the bond sales; the motion carried on a voice vote. There was no recorded roll-call tally in the packeted minutes.
The district’s advisers emphasized that the sale-day savings — reported as "over $299,000" — equate to about a $40,000 reduction in levies annually for seven years and that state credit enhancement means some of the district’s debt benefits from the state’s AAA rating. Superintendent (name not stated) thanked Ehlers and the finance team for the work that led to the result.
The board’s authorization concludes the board-level step required to proceed to closing on the bonds; the district will complete closing paperwork and apply the levy reductions in the next budget/levy cycle.
