The news is good, Superintendent Wade Smith told board members at Tuesday’s board meeting for Walla Walla Public Schools.
Good, as in “very strong.”
Recent analysis of the Walla Walla school district’s credit standing by two credit-rating agencies has shown the district to be in excellent shape to market the $65.6 million bond.
That bond is on the ballot for Nov. 6 and would renovate and repair Walla Walla and Lincoln high schools, plus Pioneer Middle School.
If approved by voters, the bond will up for sale almost immediately following the general election, he said this morning.
A strong credit rating makes that process easier, Smith pointed out.
“We will carefully monitor conditions to be sure there aren’t a lot of other municipalities selling on the same day so the market isn’t flooded.”
The district collaborates with Montana-based management company D.A. Davidson, which serves as the bond underwriter and agent, to sell the bond in monetary increments. Often, Smith said, local folks and agents will buy some of what’s for sale, and such bonds are attractive to banks and investment firms looking for safe, long-term and stable portfolio additions.
Smith will approach such potential buyers by early December if the bond vote is successful, he told board members.
Moody’s and Standard & Poor’s, two of the three largest global credit rating agencies, examined the health of WWPS and found it to be “high quality,” well above the “upper medium quality” most public institutions are ranked, Smith said.
Smith said when credit agencies look at institutions, they check for multiple factors, including what’s in the bank as reserves, what government is doing financially, the local economy and community assets, how well the district has fiscally performed — is it making payments on time and paying off debts? — and its debt load.
Moody’s called the district’s credit position “very healthy,” noting its strong financial position, as well as the healthy local economy and tax base. Most notable was the agency’s comment on the district’s “extremely small” debt load of less than half of 1 percent, saying it is “materially below other Moody’s-rated school districts nationwide.”
That rating bodes well for the district in future bond sales; such a strong credit backing helps motivate greater enthusiasm from investors, often driving down interest costs at the time of sale, Smith said.
He’s seen it before, he added, recalling a bond sale in the Hermiston School District where a high credit rating saved about $5 million for taxpayers, reducing the both loan interest rate and payback time.
The Nov. 6 bond, set to maintain the current bond rate of $1.23 per $1,000 of assessed property value, would be eligible to garner an estimated $52.6 million in Washington state matching funds, officials said.
Any excess money remaining following the completion of projects will be used to pay down bond debt. An 11-member Community Bond Oversight Committee will oversee the entire program to ensure transparency, accountability and fiscal stewardship of the funds, Smith noted.