Within the next few weeks, District 202 will issue $4.27 million in general obligation bonds. “This will be a negotiated sale, not a competitive sale,” said Chief Financial Officer William Stafford. A negotiated sale, he said, offers more flexibility than does a competitive sale, which takes place at a specified time. The School Board approved a resolution for the bond issue at its March 17 meeting.
The bonds will be issued within six months, will have less than a 5% interest rate and will have a maturity date of “not beyond 20 years,” Mr. Stafford said. The District typically invests about $2 million each year in capital projects and issues about $4 million in bonds every other year, he said.
In anticipation of the bond issue, Moody’s Investor Service assigned the District an Aaa rating. According to the Moody’s report, the Aaa rating for District 202 incorporates the District’s proximity to the City of Chicago, affluent demographic profile, healthy financial position, strong fiscal management and modest direct debt burden. The report also said the District’s financial operations are expected to “remain strong going forward given [District 202’s] history and likely continuation of solid fiscal management.”
Only 74 school districts nationwide received this rating by Moody’s.
“We were pleased six years ago when ETHS received its first-ever Aaa bond rating. Since that time we have worked diligently to maintain and even improve our excellent financial standing,” said District 202 Superintendent Eric Witherspoon.
“We’re pleased with the Aaa rating because it highlights our strong fiscal management and assures District 202 taxpayers that we are doing all we can to minimize the District’s borrowing costs,” said Mr. Stafford.
Board member Mark Metz said there is “an opportunity to offer these bonds at attractive rates. Is there an opportunity to alter the every-other-year strategy and take advantage of the bond market?”
Mr. Stafford said there are a few reasons the District could not do that: the debt ceiling, the $8 million limit established at bond hearings a few years ago, and the school’s capacity for larger capital projects.
John Peterson, the District’s bond counsel, who attended the March 17 meeting, said the equalized assessed valuation of the District declined in 2008, 2009 and 2010, “so there was some apprehension that the decline in the wealth of the community might affect the District’s bonds.” He said that when the raters from Moody’s came to Evanston Township High School, they “had a grand time. They could not believe their eyes.”
The Moody’s report also listed two challenges for the District. One was the depreciation in the tax base, and the other was the likelihood that the State would shift some of its annual pension costs to the local school districts “following years of underfunding by the state.” Mr. Peterson told the Board, “The [Moody’s] analysts said, ‘Neither of these is under your control.’ The younger of the two said, ‘This is a really, really, really strong credit.’ So you should be proud.”