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CAB Board Hosts Finance Consultant
February 25, 2009 - Last week's regular monthly meeting of the Charles A. Beard School Board ran nearly three hours, the result of several presentations to the board being scheduled for the same night.
Lonnie Therber, a financial consultant from Indianapolis, returned to speak to the board at the Feb. 17 meeting about options surrounding the possible "refunding" on a 2001 bond issue that helped finance construction of Knightstown High School. With interest rates lower than when he spoke to the board in November, Therber said he thought this was a good time for the board to move forward.
Therber said savings from refinancing can no longer be taken in the form of cash, but must, instead, be used to reduce existing debt. However, he said refinancing to add a couple of years on to the life of the debt could result in money being available for other projects.
If CAB goes ahead with the refunding process, Therber said the school corporation could then get access to a little over $2 million being held by the Knightstown High School Building Corporation. Therber said the KHS Building Corporation is the school board's "partner in this" and would have to pass its own resolution approving any refinancing.
Therber said the school board was not required to take any further action. However, he said they would need to give some direction to the KHS Building Corporation as to how they should proceed. While he said the school board could give the building corporation permission to do whatever they want with the $2.1 million they're still holding, he recommended the school board be the one to make those decisions.
Board Vice President Steve Dalton asked if CAB could refinance Common School Fund loans that had been used to help finance construction KHS. Therber said those loans, which are controlled by the Indiana Department of Education, cannot be refinanced.
"The last time I inquired," Therber said, "after they stopped laughing, they said, 'No, you can't do that.'"
Dalton then asked if there wold be a way to refinance these loans with a first mortgage. While he again said he thought the DOE would not allow this, Therber said he would research the matter and report back.
"I think we have the cart before the horse," Dalton said. Before deciding between the different refinancing options, he said he would want to know how the money is going to be used and wanted to get feedback from the building corporation.
Therber said the reason the board should consider acting now is because of low interest rates, which he said could go up anytime. He also said if the board waits too long to act, it might miss out on getting access to all the funds now available.
"If we're going to do this, this is the time ...," Dalton agreed. With interest rates and construction costs likely to go back up as the economy recovers, he said now is a "window of opportunity" for CAB.
Storie, along with school board members who serve on the finance committee, will meet with Therber and the KHS Building Corporation to discuss this matter further. They will then report back to the full board.
In new business at last week's meeting Bob Wede and Dale Bozell from Performance Services gave a PowerPoint presentation to the board highlighting information about the heating and cooling systems at CAB's schools. Wede said the board could use Guaranteed Savings Contracts for any heating and cooling improvement projects, with funding coming from CAB's Capital Projects, Debt Service or General funds, or from federal stimulus money.
Wede explained that CAB would use requests for qualifications (RFQ's) to solicit proposals on any projects it wants to do. Once these come in, he said the school corporation would select a provider to partner with on any projects undertaken.
"I think it's a great idea," Dalton said. "We need to go forward and go forward quickly."
"I think it makes a lot of sense," board member Tom Schaetzle agreed.
The board gave Storie permission to advertise that it is accepting RFQ's for a variety of heating and cooling work on CAB's schools. He will then bring these back to the board once they're received for the board to review and make a selection.
The also received detailed PowerPoint presentations last week from CAB's elementary principals, Shirley Heck and Christine Brokamp, on student performance on last fall's ISTEP-Plus exam. Heck went first, going over test results for students at Kennard and Carthage elementaries, followed by Brokamp's report on Knightstown Elementary's students. Both Heck and Brokamp also provided board members with printouts of their respective PowerPoint presentations.
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