Saturday, July 19, 2008

Current MTLSD Debt Obligations

One of the things I have tried to get a good handle on is the District's current financial obligations. One of the places I look to is the current and future debt service payments for the District. In order to better understand what we can do, it's important to understand where we are.

First, let me throw some numbers out there. Most of this information can be found on pages 84 and 109 of the 2008-2009 Budget. The District is currently about $72,580,000 in debt. Our average debt service payments between now and the 2029-2030 school year (when current debt will be paid in full) will be $4,958,052. Total payments on this debt will equal $118,993,268 if we do not refinance any of our obligations. Current debt service payments equal about 7% of our budget or 2.4 mills ($240 per year per $100,000 assessed value).

The District currently has four outstanding debt issues. The 2002 bonds are a refinancing of the 1997 Middle School Bonds. The 2002-A bonds are a refinancing of the 1998 Middle School Bonds. The 2004 bonds are a refinancing of the 2000 and 2001 bonds. The 2005 bonds are a refinancing of the elementary school renovation bonds originally floated in 2003.

Below is a chart that shows how these obligations are paid and when they will come off the books:

Click on image for larger picture

You can view the data for the chart here on Google Docs.

Bond payments have been structured in a way to make the payments consistent over time. This consistency allows for the District to plan more easily for future budgets.

Our payments on the 2005 General Obligation Bond spike in 2018 (after all other bonds are paid off, payments on this bond increase) and the interest rate fluctuates between 3.0% and 4.7%. Interest rates today are probably a bit different. You can see here that Reading School District floated a $100,000,000 bond issue on July 15, 2008 and the bids all came back at just under 5% interest. Reading has a Moody's Bond rating of AAA. Upper Dublin School District floated $53 million in bonds on May 20th of this year and and the bids all came back just under 4%. Dublin has an A1 Moody's rating. Mt Lebanon's bond rating is between these two. We have an AA2 rating from Moody's. It's hard to say where our interest rate will end up. If I had to guess it would probably be somewhere in between the two issues mentioned above. It is important to keep in mind that the bonds are competitively bid on and that the interest rate will be determined by many factors outside of just the District's credit rating.

Once we start to get hard numbers on the high school project options, I will be sure to post calculations on the cost of each solution in dollars, mills, and taxes. I will also post how I see each of the solutions benefiting the students and the community.

Until then, I hope to see everyone at the High School Project Forum on Tuesday night.