The Proviso Township High Schools District 209 school board is looking at refinancing $10 million of working cash bonds that the district issued in 2008 in order to take advantage of lower interest rates. The reduced rates, district officials say, could lead to substantial savings and more money to fund major investments, such as the district’s master facility plan. 

But board President Theresa Kelly and member Della Patterson were leery of the proposal, with Patterson saying that it felt like “de ja vu.” 

“I have seen this before — over and over,” Patterson said during a Nov. 7 regular meeting where the issue was discussed. “The money you got in 2008, it was supposed to be used for facilities. It wasn’t … This is not the first time money has been refinanced … We’ve been told before in this community that [money] was going to be put aside and when it came time to use it, it was nowhere to be found.” 

Most district officials and board members, such as Supt. Jesse Rodriguez, touted the refinancing proposal as a major opportunity for significant savings, with Rodriguez calling the measure a “big deal” that will help the district maintain the 30 percent fund balance threshold that he considered to be critical to future financial solvency. 

District officials said that, over the last three years, D209 has issued over $21 million in bonds to pay for capital upgrades. In 2008, the district issued working cash bonds to fund operations. During that time, officials noted, “there was a need for cash to pay the bills. When the District issued the 2008 bonds, there was a written provision that allowed the District to refinance the debt in the future, prior to the end date of the bonds.” 

In effect, the district plans to use current funds on hand to pay off $10 million of the bonds that were issued in 2008 for operations, but which were never spent, and to re-issue $10 million worth of bonds this year that will be used for capital improvements.

In addition to reduced interest rate payments of roughly 3 percent, the transaction, officials say, could also increase the district’s non-referendum funding capacity by around $5 million — from $25.5 million to $30 million. 

According to a document drafted by representatives from Mesirow Financial, the district’s bond underwriter, the “refunding and expected substantial interest cost savings are a credit positive for the District and yet another example of prudent fiscal management with focus on cost reductions.” 

The refunding could also be used as an opportunity to “re-engage rating agencies and illustrate the many positive financial trends” at D209, Mesirow representatives explained. Those positives include more cash on hand, long-term plans for capital improvements and the “transition to balanced budget from [a] history of structural deficits.” 

Mesirow said that, while an increased credit score isn’t a guaranteed result of the refinancing, an upgrade to high-A credit is possible for the district, which currently has an A credit rating from Standard & Poor’s — up from BBB. 

Despite the optimism of Mesirow representatives and other district officials, however, Kelly expressed some leeriness about what she felt was the rushed nature of the refunding proceedings. In addition, Kelly, like Patterson, had the district’s history of refinancing at top of mind. 

District officials said that timing was important, since market conditions could be different next year. 

Todd Krzyskowski, a managing director with Mesirow, said that the district could refund the remaining $14 million of the $24 million in outstanding bonds next year. The total savings from refinancing all of the outstanding bonds could amount to around $5 million in savings, he said. 

According to Tod Altenburg, D209’s chief business official, the district refunded a portion of bonds issued in 2004 at the end of 2016. That action produced about $1 million in savings, he said.  

“This board and I have a responsibility to make sure that we don’t make the mistakes of the past,” said Rodriguez, addressing Kelly’s and Patterson’s concerns. “I want to ensure you that together we’ve got to do it right.” 

The school board was scheduled to vote on a resolution providing for the bond refunding at a Dec. 12 regular meeting.