SPS Bond Strategy Presentation IO N for PRESENT A T Springfield Public Schools Board of Education May 7 th , 2019 George K. Baum & Company’s Presentation Missouri Public Finance 4801 Main Street, Suite 500 | Kansas City, MO 64112 | (800) 821-7195 | www.GKBaum.com
WWW.GKBAUM.COM MO PUBLIC FINANCE | 800.821.7195 | 4801 MAIN STREET, SUITE #500 | KANSAS CITY, MO George K. Baum & Company Contacts Joe Kinder Brent Blevins Senior Vice President & Manager Senior Vice President Missouri Municipal Finance Missouri Municipal Finance Kansas City, MO Rogersville, Missouri Email: kinder@gkbaum.com Email: blevins@gkbaum.com Phone: (816) 283-5110 Phone: (816) 283-5152 Website: www.gkbaum.com Website: www.gkbaum.com 2 May 2019 For Discussion Purposes Only
WWW.GKBAUM.COM MO PUBLIC FINANCE | 800.821.7195 | 4801 MAIN STREET, SUITE #500 | KANSAS CITY, MO AGENDA Preliminary Action Plan Basis/Reasoning 3 May 2019 For Discussion Purposes Only
WWW.GKBAUM.COM MO PUBLIC FINANCE | 800.821.7195 | 4801 MAIN STREET, SUITE #500 | KANSAS CITY, MO PRELIMINARY ACTION PLAN Target $163,000,000 in funds available for initial construction • Covers planned bond expenditures for 36 months • Funds available include interest earned in project fund over the course of construction (As much as $4,800,000) • Issue remaining authorization 18-24 months from today Structure bonds with two goals in mind • Achieve lowest possible yield • Maintain flexibility for future projects, as well as, potential variance in project costs Dates • Bond Sale Date: May 21st • Bond Closing Date/Funds Available: June 4th 4 May 2019 For Discussion Purposes Only
WWW.GKBAUM.COM MO PUBLIC FINANCE | 800.821.7195 | 4801 MAIN STREET, SUITE #500 | KANSAS CITY, MO BASIS/REASONING Why target 36 months worth of expenditures? • Why not more? Once issued, bond proceeds need to be spent within three years, for two reasons: • Over-issuance (Reasonable belief that 85% of funds will be spent inside three years) • Arbitrage Rebate • Why not less? Current interest rate environment– Flat Yield Curve • Long-term yields near historic lows (great for issuing debt) • Short-term yields are higher than in years past and the District has the opportunity to earn significant interest on the project fund 5 May 2019 For Discussion Purposes Only
WWW.GKBAUM.COM MO PUBLIC FINANCE | 800.821.7195 | 4801 MAIN STREET, SUITE #500 | KANSAS CITY, MO PRELIMINARY ACTION PLAN Interest Earned in Project Fund 6 May 2019 For Discussion Purposes Only
WWW.GKBAUM.COM MO PUBLIC FINANCE | 800.821.7195 | 4801 MAIN STREET, SUITE #500 | KANSAS CITY, MO PRELIMINARY ACTION PLAN Structure Issue $148,000,000 Par Mix of Discount and Premium Bonds Aggressively Pursue Lowest Yields for District Maintain Flexibility in Structuring Bond Yield: 2.90% 7 May 2019 For Discussion Purposes Only
WWW.GKBAUM.COM MO PUBLIC FINANCE | 800.821.7195 | 4801 MAIN STREET, SUITE #500 | KANSAS CITY, MO PRELIMINARY ACTION PLAN Recent SPS Structure History 2010 – All Taxable, Federally Subsidized Bonds through ARRA Program 2011 – Premium Structure (Single Maturity) 2012 Refunding – Premium Structure 2013 – Mix of Premium and Discount Bonds (Premium Overall Structure) 2014A – Mix of Premium and Discount Bonds (Premium Overall Structure) 2014B Refunding – Premium Structure 2017 Refunding – Premium Structure 8 May 2019 For Discussion Purposes Only
WWW.GKBAUM.COM MO PUBLIC FINANCE | 800.821.7195 | 4801 MAIN STREET, SUITE #500 | KANSAS CITY, MO PRELIMINARY ACTION PLAN Historic Yield Curve 9 May 2019 For Discussion Purposes Only
WWW.GKBAUM.COM MO PUBLIC FINANCE | 800.821.7195 | 4801 MAIN STREET, SUITE #500 | KANSAS CITY, MO BASIS/REASONING Additional Advantages to Action Plan Flexibility – saving some authorized bonds also allows flexibility • Flexibility as project costs evolve • Flexibility as project timelines evolve • Flexibility as next issue nears 10 May 2019 For Discussion Purposes Only
WWW.GKBAUM.COM MO PUBLIC FINANCE | 800.821.7195 | 4801 MAIN STREET, SUITE #500 | KANSAS CITY, MO BASIS/REASONING Additional Advantages to Action Plan Saves on Issuance Costs – two issues limits issuance costs • Our fee is same regardless of when or how issued (% of par); however • Other fees related to the transaction occur each time bonds are issued: State Auditor Fee - $1,000 per issue (The Bricker Bill 2008 - SB944) Paying Agent – Charge flat fee for each issue Rating Agency Fees – fee lowers as issue grows; splitting reduces size and increases costs Document Preparation – new documents must be prepared with each issue Bond Counsel Fees – similar to rating agency 11 May 2019 For Discussion Purposes Only
WWW.GKBAUM.COM MO PUBLIC FINANCE | 800.821.7195 | 4801 MAIN STREET, SUITE #500 | KANSAS CITY, MO FUTURE PLANNING How does plan impact future issues? Cash Flow Analysis Debt Service Fund Assumptions: • 2021 Finish Authorization • 2023 Bond Issue - $120,000,000 • 2026 Bond Issue - $180,000,000+ 12 May 2019 For Discussion Purposes Only
WWW.GKBAUM.COM MO PUBLIC FINANCE | 800.821.7195 | 4801 MAIN STREET, SUITE #500 | KANSAS CITY, MO George K. Baum & Company does not endorse, guaranty or approve, and assumes no responsibility for, the content, accuracy, reliability, or completeness of the information contained in the following presentation. The information in the following presentation was compiled from sources believed to be reliable for informational purposes only. Presentations are intended for educational purposes only and do not replace independent, professional judgment. You should not take, or refrain from taking action based on its content. The opinions expressed by each presenter are theirs alone and may not necessarily represent those of employers, institutions or other entity affiliated with each presenter. Any and all information contained therein is not intended to constitute legal advice and accordingly, you should consult with your own attorneys regarding the application or impact of any of the information for your specific situation, needs or use. 13 May 2019 For Discussion Purposes Only
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