MESA Public School’s financial advisors and managers told its board on March 15 that the time had come to raise the final $95 million of the $300 million in approved general obligation bonds. by voters in 2018.
Uncertainty in the world stimulates the bond market, traditionally considered a safe haven for money in times of instability. So even though inflation is higher than it has been in decades – which is bad for bondholders – municipal bond interest rates are still at historic lows.
On the advice of its financial advisers, the MPS board voted 5-0 to end its authorized bond sales, taking a bigger bite out of the apple than it has taken with the last four sales. , which have raised funds in installments of $65 million or less. .
“We like to strike while the iron is hot,” said Assistant Superintendent of Business and Support Services Scott Thompson. “We think we can get a very good interest rate (now). We also have a lot of projects going on, so we need those funds.
In 2018, voters were asked to approve bonds for capital upgrades, including building renovations and upgrades, technology updates and transportation improvements.
“Bonds are really the mechanism we have as a district to do some of these larger projects that we know are important to our community,” said board chair Jenny Richardson.
According to an MPS website, some of the district-wide improvements funded by the 2018 bond include the installation of more than 7,000 wireless antennas to improve internet in the district and upgrades to the wide area network of the district, which helps students and teachers access school resources remotely.
The district also purchased 240 fuel-efficient vehicles, including 150 special education buses, 60 regular buses and 20 vans.
Thompson said the purchases help the district “ensure that every child is on an air-conditioned bus.”
In 2019, MPS developed a master plan for major renovations at Mountain View High School and Mesa High School totaling $100 million. Thompson said those overhauls are being built in phases, and the 2018 bond puts the first third of the planned renovations in place.
He said major renovation projects have also taken place at Lehi and Longfellow Elementary Schools, and that “many different elements have seen smaller projects.”
“It seems like a lot of money, but the district has used these funds aggressively, in part because the faster we get the job done, the more work we can get done, due to the inflationary increase we’ve seen” , Thompson said. .
He said a less obvious, but important project backed by recent bond funds were major school safety improvements, which became a priority after the 2012 Sandy Hook school shooting.
Contractors installed perimeter fencing in schools to create a single point of access, enhanced security features in reception desks, and installed video cameras and communications systems to help lock schools down quickly.
Thompson said bond money has been especially important over the past 13 years because public funding for capital improvements collapsed during the Great Recession.
“This year is officially the first full restoration of this capital funding from the recession,” Thompson said, adding that the district lost about $200 million due to the cuts.
Selling bonds when interest rates are low — along with Mesa’s growing property tax base — helps the MPS keep tax rates below what voters approved, said officials on the board of directors.
Grant Hamill, general manager of MPS financial services provider Stifel Nicolaus and Co., described the school district’s approach to acquiring debt for capital improvements as “conservative.”
Hamill told the board that state law allows school districts to issue debt for up to 20 years, but MPS chooses to pay off debt in 10 years. He also said that with an estimated asset value of $5.3 billion, state law allows the district to assume up to $744 million in debt and MPS’s current debt is $310 million. of dollars.
The difference is “more than enough to deliver the remaining clearance,” Hamill told the board.
Richardson wanted voters to know that the district is careful with its money and trying to keep tax rates low.
“I want the public to listen to maybe really understand how careful the board and the district are to make sure we’re aware of the impact on their contributions,” Richardson said.