DALLAS — Today’s negotiated sale of $104.5 million of general obligation refunding bonds by the Orleans Parish Parishwide School District is seen as an indication that New Orleans is recovering from the devastating storms of 2005.
“This is a great sign for the entire city,” said Damon Burns, a vice president with Morgan Keegan & Co. and lead banker on the sale. “Like every public agency in this city, the school district has gone through a lot of stress. The trustees and officials with the school district have focused attention on returning to a strong financial position, and that has paid off for the taxpayers.”
Morgan Keegan is underwriter for the issue. Bond counsel is Foley & Juddell LLP. The bonds, which are the first debt issued by the district in more than 10 years, are rated Aa3 by Moody’s Investors Service and A-plus by Standard & Poor’s.
Buck Landry, managing director at Morgan and head of the firm’s offices in New Orleans and Baton Rouge, said the strong ratings are an endorsement of the district’s fiscal policies.
“The school district is in great financial shape,” he said. “The audits have been clean for the past four years, and that is something they can be proud of. This is a good municipal credit, and we are looking forward to a great sale.”
Refunding candidates include $20.8 million of outstanding debt from 1995, $20.5 million from 1996, $44 million from 1997, and $31.3 million from 1998.
The refunding will shorten the maturities on the debt to 10 years from 12 years.
Burns said the district would realize net-present value savings of about 10%, freeing up money that can be redirected to academic needs.
“The refunding will save the district hundreds of thousands of dollars in net debt-service costs that can be used elsewhere,” he said.
Stan Smith, chief financial officer for the school district, said no new-money bond issues are anticipated for many years.
“We expect the district will receive enough in reimbursements from the Federal Emergency Management Agency for damaged facilities to account for our needs through 2018 or 2020,” Smith said. “At that point, having demonstrated strict financial management, we may ask the voters to approve additional bonds.”
Smith said the district expects $1.5 billion in FEMA payments for schools damaged by hurricanes Katrina and Rita in 2005. The money would be shared, on a per-student basis, with the state-operated Restoration School District.
Following the 2005 storms, the school district serving Orleans Parish — the boundaries of which are coterminous with the city’s — was split. Under-performing schools were placed in the Restoration School District. The district is operated by the Louisiana Department of Education, but the facilities are owned by the parish school district.
The Orleans Parishwide School District operates four traditional schools, 12 charter schools, and two program facilities. Enrollment is slightly more than 10,000 students.
The restoration district has more than 25,600 students.