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Board directs staff to refine short‑term borrowing plan after referendum win
Summary
After voters approved operational and capital referendums, the West Salem School Board heard a financing update from Baird and unanimously directed staff to pursue a $10 million bank anticipation note and prepare parameters for long‑term borrowing to present at the Nov. 25 meeting.
The West Salem School Board on Nov. 11 directed district staff to continue planning short‑term borrowing tied to the recently approved referendums and to return with final paperwork for board approval at its Nov. 25 meeting.
The action followed a presentation by Brian Brewer of Baird, who told the board that current short‑term investment rates are unusually high relative to 20‑year municipal borrowing rates — a short window that could allow the district to earn investment income on funds placed in a project account. "This allows you to either earn at least up to what federal law allows, and in this case, more than what your cost of borrowing is," Brewer said, explaining the small‑issuer exception and a phased borrowing approach.
Brewer proposed a staged plan to remain under statutory thresholds while maximizing yield: a Phase 1 short‑term note of $10 million to be borrowed this calendar year; Phase 2 borrowing of roughly $13–15 million in 2025; and a final tranche of about $3–5 million in 2026 to reach the referendum total near $28 million. He said the district could also make a targeted principal prepayment — about $3 million in 2025 — drawn from levied funds to reduce future long‑term financed principal. Brewer explained the payment would be eligible for state aid reimbursement the following fiscal year.
Board members questioned refinancing flexibility and market timing. Brewer said refunding (refinancing) future maturities is possible depending on redemption provisions and investor expectations and that negotiating the redemption period is part of the issuance process. "Once it's fixed…you can refinance it should some of those anomalies happen," he said.
The board voted unanimously to "continue to investigate the options and gather up the paperwork to bring it forward for the November 25 board meeting for approval." Chair (S1) called the voice vote after a motion from Board member Bridal (S5). No formal changes to levy levels or final borrowing amounts were adopted at the meeting.
Brewer noted next steps would include coordination with the district's bond counsel (Quarles & Brady), possible bank documentation for a bank anticipation note to close in 2024, and a parameter resolution that would delegate final sign‑off to district officers within established limits on amount, term and rate. He also advised the board the district's current S&P rating is double‑A minus and that the financing structure aims to maintain or improve that rating.
The district will consider a bank‑qualified structure for the initial $10 million (to access certain bank buyers and tax benefits) and compare tradeoffs with non‑bank market pricing for the larger 2025 issuance. The board will revisit the staff recommendations and proposed resolutions at the Nov. 25 meeting, where members may vote to set final terms and authorize closing.
