R-4 Board approves bond refunding

Wednesday, May 22, 2013

The Cassville R-4 School Board approved a bond refunding resolution for $5,350,000 at its regularly scheduled meeting on May 16.

The resolution authorized the sale of general obligation refunding bonds at an average interest rate of 1.43 percent. The Series 2006 Bonds carried an average interest rate of 4.26 percent.

"We have been fortunate that the board of education has been focused on fiscal responsibility that the parents and patrons of our district provide us when they support bond issues," said Superintendent Richard Asbill. "I am honored to continue the good work the board and previous Superintendent Jim Orrell began on managing the district finances to support short- and long-term financial needs while also focusing on the economic needs of our community and taxpayers.

"This plan achieves good savings and allows the district to capture better conditions in the municipal bond market for the benefit of our taxpayers," continued Asbill. "It also preserves considerable flexibility for the district in the future for our building improvement plans that will be needed in the future."

Through the refunding, the district will reduce future interest expenses by $932,206. The resolution also shortens the final maturity of the original Series 2006 Bond issue by two full years. Combined with a savings of $1,226,337 from four previous refunding and prepayments, the district has saved $2,158,543 in interest expenses since 1997.

R-4 Board President John Sullivan pointed out that the district could save even more due to the Series 2013 Refunding Bonds having a call feature in March 1, 2016, at no penalty.

"If interest rates are lower in 2016 or later, we can take advantage of that," said Sullivan. "Meanwhile we are locking in these levels that are more than 2.75 percent lower than they were in 2006."

Larry J. Hart, president and chief executive officer of LJ Hart and Company, of St. Louis, which prepared the refunding proposal, explained how it can fit into the district's long-range plans. In addition to lower interest rates, the fact that a $1,760,000 portion of the Series 2006 Bonds maturing from March 1, 2015, through March 1, 2019, and a $3,590,000 portion maturing from March 1, 2022, through March 1, 2026, are subject to prepayment on March 1, 2014, and March 1, 2015, at no penalty.

The district can also participate in Missouri's Direct Deposit Program, which makes it possible for Cassville to receive an AA+ rating from Standard and Poor's Corporation on the Series 2013 Refunding Bonds.

Hart complimented Asbill for "prompt and thorough preparations to supply the date necessary for the rating application and official statement."

"It is nice to be able to save $932,206 of our taxpayers' money, boost our total interest savings to $2,158,543 and shorten the final maturity by two full years," said Greg Allen, board vice president.

"Our goal has always been to provide outstanding facilities and ensure that our current facilities are well maintained," said board member David Haddock, who served on the board's capital projects committee. "In the near future, it will be important to ask our community to support efforts to continue those plans.

"We have been looking at several needs that our school will have in the future, and we need to take action now to prepare for those improvements," added Haddock.

"We will have needs, like electrical improvements for our classrooms, technology needs, roof repair and improvements to our heating and air systems to ensure that our facilities are safe and effective for our children to learn," said board member Becky Henningson, who also served on the capital projects committee.

"The board of education has worked very hard to be good stewards of the taxpayers' investment into our Cassville R-4 School District," said Jon Horner. "As an alumnus, parent and board member, I know that saving the district this interest on our bond debt is very important.

"Cassville R-4 School teachers and administrators work hard to achieve the expectations that the federal government, state and community have for our children," continued Horner. "I am honored to be a part of that and know that these efforts will help future generations of Cassville students achieve success and have greater opportunities."

Asbill pointed out that an emphasis on planning for future needs and taking advantage of cost savings measures will improve opportunities for future planning needs.

"When we have a need our school community has always been overwhelmingly supportive," said Asbill. "When we have facilities that range in age, like ours, we have to be proactive in our maintenance plan to ensure that we take care of what we have. We do not want to overlook roof or other maintenance needs and then try to catch up and repair facilities.

"Many of our facilities will need electrical upgrades to accommodate the current technology needs," continued Asbill. "Our facilities will need repair to heating and air systems to improve efficiency and help with annual cost savings needs. Many of our short-term projects can be achieved with proper planning and our own staff however, we believe that in the coming year or two we will need our voters to support our efforts to improve facilities, classrooms and make additions to accommodate student needs."

The closing for the Series 2013 Refunding Bond issue will occur on June 5. The bonds were marketed to local financial institutions with Security Bank of Southwest Missouri purchasing $450,000 and Commerce Bank acquiring $485,000 of the bonds to support the district.

The $5,350,000 of bond proceeds from the Series 2013 Refunding Bonds will be placed in an escrow account with Commerce Bank in Kansas City and reinvested in the U.S. Treasury Securities. The earnings from this escrow account will cover the interest payments on the Series 2013 bonds through March 2015 and prepay $1,760,000 of the Series 2006 bonds callable on March 1, 2014, and $3,590,000 in the Series 2006 Bonds callable on March 1, 2015.

In other business, the Cassville R-4 School Board:

* Accepted a letter of resignation from Kevin Miller, middle school teacher.

* Hired Earnest Garrison, eighth grade teacher, and David Hopper, middle school industrial arts teacher, for the 2013-14 school year.

* Accepted Commerce Bank as the district's depository agreement company.

* Approved the Lifetouch Photography bid, the cum laude honor system, the 4.0 grading scale and the Scott Regional Technology Center contract for the 2013-14 school year.

* Voted to continue to participate in the KIDGUARD student accident insurance program.

* Approved the Paragon Architecture agreement and Toth Engineering service agreement for the high school FEMA emergency shelter facility and the Nabholz Construction door security project, which includes the construction of new secure entrances for the primary and middle school buildings.

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