In November our community voted 70% in favor of passing Issue 9 which was a 2.58 mil bond issue that will fund phase one of our master facilities plan and will also fund general improvements such as buses, technology, band instruments, roofs, boilers, chillers, etc…
Thus, I’ve been reading the Wall Street Journal, watching CNBC and talking to my friends on Wall Street. When a community passes a bond issue they are actually providing the school district the authority to issue debt and to tax school district residents to pay off that debt over a period of time. Our school district bonds are municipal bonds which are loans investors make to local governments. They are issued by cities, states, counties, or other local governments. For that reason, the interest they pay on the bonds is usually tax-free. As the borrowing organization, we promise to pay the bond back at an agreed-upon date. Until then, we make the agreed-upon interest payments to the bondholder.
Our bonds are general obligation bonds and not secured by any assets. Instead, general obligation bonds are backed by the “full faith and credit” of the issuer (Worthington Schools), which has the power to tax residents to pay bondholders.
Last week our Treasurer Jeff McCuen, Assistant Treasurer TJ Cusick and I, worked with RBC Bank to actually sell the bonds. Selling the bonds is the process of packaging the debt into chunks that investors purchase. When they purchase our bonds they are essentially lending our community money. This process is important because the better we package the bonds the lower interest rate we have to pay and thus the less tax money we have to actually collect from our community.
I’m happy to share that we had a very successful sale last week. We’ve structured our debt to see a drop in millage for phase two of the master facilities plan and another drop around the time we would ask the community to support phase three of the master facilities plan. As millage drops off (debt is paid off) over time if the community approves we can issue more debt to fund future projects while requesting less of a tax increase from the community.
We’re thankful to be in a community that supports the capital needs of educating our students. We’ve sold our bonds and we’re moving forward!
-Trent Bowers, Superintendent