Public Finance

Garland County, Arkansas Public Schools


A keen interest in school districts’ long-term financial interest and unsurpassed insight into education-related bond financing has helped Stephens Public Finance guide public schools to success. Clearly and accurately explaining those roadmaps enables districts to garner the voting public’s support for those plans.

In the public finance world, funding capital projects often hinges on the wishes of voters. That means complex financial maneuvering regularly has to be telegraphed to the voting public in order to earn their buy-in – and their votes on bond issues. Fortunately for clients of Stephens Public Finance, transparency, trust and dissemination of reliable, actionable information from advisor to client are key elements of every transaction.

On May 22, 2018, Lakeside School District voters headed to the polls to decide on a ballot issue that would restructure existing bond issues and add four new debt service mills.

Lakeside School District, primarily in Arkansas’ Garland County but also with a small portion in Hot Spring County, is a flourishing district of about 3,500 students and four schools, a primary, intermediate, middle and high school. Lakeside’s enrollment has increased more than 8 percent between 2013 and 2017, and total assessed taxable property value increased from $418 million to $470 million during the same period.

To address the growing District’s needs, the May bond issue asked voters for $40 million in new money. The bond issue would also restructure two existing issues and extend their debt service mills from 2036 to 2048.

This would fund a new junior high school for seventh and eighth grades and renovation projects and improvements around the District, including a parking lot and road; a high school auditorium; primary school administration and cafeteria; intermediate school administration and cafeteria; an outdoor turf field; middle school playground turf; and primary/intermediate school parking.

Jack Truemper, Senior Vice President at Stephens Public Finance, worked with the District, primarily superintendent Shawn Cook, on the issue. Stephens is Lakeside’s municipal advisor. Truemper explained the benefit of wrapping the new bonds around existing debt. “When the District had drop-offs in debt service, this would increase the amount of principal over the life of the loan,” Truemper said. “That enabled us to level out the debt service from 2021 to 2035, when they had a drop-off in debt service, which would give the District flexibility for the future.” With existing bond issues seeing a drop off in debt service in 2027, 2030 and 2031, the new issue could add debt while keeping the District’s payments level.

“This allowed us to spread out payment and reduce the new mills we had to ask for,” Truemper said. “In other words, if we did not do that the District would have had to ask for another tax increase down the road to fund future capital projects.”

Stephens started working on financing options for the District in fall of 2017, and by the following spring the Lakeside school board adopted the resolution for the special election.

In total, the bond issue would raise $40 million in new money. But in the weeks leading up to the election, the intricacies of the transaction – and its exact cost – had gotten muddled in the conversation: $48-million, $54-million and $72-million price tags circulated on social media and flyers, inflating to voters what exactly they were being asked to agree to.

“While the issue faced no organized opposition, there was some misinformation that the District had to address,” Truemper said. “The biggest challenge was making sure we had all the questions properly answered to the voters. Our role was to make sure the superintendent had all the accurate information to be able to answer questions and concerns factually.”

Stephens worked with the District to ensure voters were notified of the ballot issue, including through local media, a public information meeting and 29 presentations throughout the community.

It was enough for voters to approve the bond issue.

The bonds received an Aa2 rating from Moody’s, and there were four bids for their sale. The winning bid, with a true interest cost of 3.8% was extremely close to two others, indicating a strong demand and good market rate for the bonds, Truemper said.

Stephens’ expertise allowed Lakeside School District to fund vital new capital projects while spreading out their bond payments, lowering their costs and reducing the amount of new mills the District would have to later ask of its patrons. It was a strategy voters agreed was best for the District’s immediate needs and long-term flexibility. Construction on the projects is planned to be completed in 2021.

Helping citizens understand the rationale behind the bond issue, what new money was being raised and how the funds are going to be used allowed voters to make informed decisions to best effect the course of their District. It’s a course Stephens has a vested interest in helping Lakeside successfully navigate. The firm has been serving public finance clients in its home state since 1933. Lakeside has been a client since the 1980s, and there is a good chance the two will still be working together at the time these new bonds mature.

Taking the long-term view of clients’ interest and providing unmatched expertise has allowed Stephens to nurture decades-long relationships with education clients. A history of doing right by those clients and putting their interests first has afforded the firm an unmatched trust in the communities it serves.

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