Wisconsin School Districts Cash Flow Administration Program
Sole Manager: $35,795,000 Note Participations, Series 2013A
Dated: September 26, 2013
Maturity: October 10, 2014
Ratings: Moody’s: MIG1
-Each Notes is a tax and revenue anticipation promissory note of the School District
-Each school district issues its note in anticipation of its estimated receipts for the operation and maintenance of its schools for its fiscal year ending June 20, 2014. The receipts include: Ad valorem taxes levied in 2013 for collection in 2014, State equalization aid, other State aids, miscellaneous revenues.
The primary objective for the program is to provide school districts with timely access to capital markets at the lowest borrowing costs. Costs are reduced by limiting costs of issuance and potential negative arbitrages. If rates move up, the program allows for reinvestment of proceeds to float and potentially increase. The Districts have access to affordable and efficient Resolutions, Notices, and Legal Opinion through bond counsel.
2013/14 Cash Flow Administration Program Advantages:
The program in 2013/14 had the advantage of being a larger issue size which spread costs of issuance. Due to the larger issue size, there was increased investor interest and lowered borrowing costs. There was a market for rated cash flow borrowings which resulted in a borrowing rate that is nearly half of a non-rated borrowing. The reoffering yield on the Series 2013A borrowing was 0.30%.
2013/14 Cash Flow Administration Program Structure:
The structure of the program included grouping together 14 school districts’ cash flow borrowings together in order to spread the costs of issuance. The structure provided for the impoundment of funds prior to maturity to enhance security. The program obtained a rating of MIG1 by Moody’s which ensured the lowest borrowing cost.
The notes are secured by a combination of each district’s available revenues, primary property taxes levied for operations and state aid. The MIG1 rating reflects the historical timeliness and predictability of pledged revenues, the accuracy of past cash flow projections, the reasonableness of future cash flow projections, the segregation of funds with the trustee 25 days in advance of maturity and the underlying long-term credit characteristics of the pool participants (no lower than A1). The notes represent collectively the tax and revenue anticipation notes of each of the 14 districts, though there is no joint liability, with the notes representing direct and binding obligations of the individual school districts.