Lincoln Public Schools

LPS bonds sold at premier interest rate

Originally published on: August 25, 2009

Lincoln Public Schools (LPS) recently issued $20 million in limited tax obligation bonds to help fund renovation and construction projects across the District, selling them at an interest rate of 3.01 percent – well below the projected rate of 3.20 percent, according to information presented at the Lincoln Board of Education meeting Tuesday night, August 25.

“These unprecedented interest rates are the direct result of outstanding bond ratings that come from good work in managing District finances by the Board of Education and the LPS administration,” according to Scott Keene, the fiscal agent for LPS, and vice president and managing director of Ameritas Investment Corp.

“People want to buy the bonds of a well-run and well-managed school district,” Keene explained.  “This kind of strong response from the investing public is a result of the high level of respect the public holds for the LPS administration, staff and teachers, and the LPS tradition.”

This recent bond issue is part of the 10-year facility financing plan adopted by the Board of Education in 2005, based on recommendations from the LPS Student Housing Task Force, a group of citizens appointed to advise the District about facility needs and financing.  

For the sale of the bond issue, LPS received ratings of: Double AA+ from Standard & Poor’s and an upgraded rating of Aa1 from Moody’s Investors Corp.

“This kind of upgrade is almost unheard of in this economic environment,” Keene said, stressing that the ratings are crucial to a school district.  If LPS had received a single A rating, he explained, the District would have expected interest rates at a full 1 percent higher – which would have cost LPS as much as $1.6 million additional dollars for this bond issuance.

“These bond ratings occur when you have a District that makes sound and sensible decisions regarding its finances,” Keene said.  He specifically cited examples such as: maintaining an adequate cash reserve, receiving excellent audit reviews, and having a Board of Education that makes informed and wise financial decisions.

Proceeds from these bonds – for the Qualified Capital Purpose Undertaking Fund – represent about half of the money needed to fund the current Phase 2 projects identified in the LPS 10-year Facility Plan: upgrades for one middle school and 10 elementary schools located across the District.

These types of bonds fund construction projects that target specific purposes:  environmental hazard abatement, improvements in handicapped accessibility, modifications for indoor air quality, modifications necessary to bring buildings up to current codes and modifications for mold abatement and prevention.

The Board of Education held a public hearing on the bond sales and then authorized the sale at the Board’s August 11 meeting.