Clarkston Community Schools and the Board of Education announced last week that the district has saved taxpayers $4,029,346.
This savings results from the successful sale of approximately $54 million of refunding bonds to refinance outstanding bonds, originally issued in 2016 to finance school building and site improvements throughout the district.
Seventeen different financial institutions purchased the new bonds at an average interest rate of 2.854 percent compared to the initial rate of five percent. The transaction also shortens the repayment term by four years, ending in 2025 versus 2029.
“I am thankful to our taxpayers for trusting us to make the best decisions for our students and staff,” said CCS Superintendent Dr. Shawn Ryan. “As good financial stewards, our duty is to be fiscally responsible and pursue any avenue to save money, (and) this transaction is proof of our efforts.
“I am genuinely proud of our financial team here in Clarkston and appreciate their hard work.”
Earlier this year, Moody’s Investors Service assigned an A1 underlying rating and an Aa1 enhanced rating to Clarkston Community Schools.
The A1 issuer rating reflects strong resident income and wealth, fairly stable enrollment, and elevated leverage. Fund balance and liquidity are adequate and will likely strengthen further over the next two years but are well below sector medians. The district’s GOULT bonds (general obligation unlimited tax bonds) are rated A1 because it is equivalent to the A1 issuer rating, based on the district’s full faith and credit pledge as well as an unlimited property tax levy that is dedicated to debt service.
The Aa1 enhanced rating is based on the State of Michigan’s School Bond Qualification and Loan Program’s programmatic rating. Under the program, the state has a constitutional obligation to provide a school district with sufficient funds to make timely debt service payments, if necessary. Fundamental to the Aa1 rating are the program’s sound mechanics to ensure timely payments, which include a provision for independent third-party notification to the state in the event of debt service insufficiency, and the strength of the state’s general obligations, which are rated Aa1.
CCS was assisted in the bond sale by its financial advisor, PFM Financial Advisors LLC, its bond attorney, Thrun Law Firm, and Huntington Securities as the bond underwriter.