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MDUSD Sept. 27 appointments and bond refunding presentation

By Theresa Harrington
Sunday, October 9th, 2011 at 8:41 am in Education, Mt. Diablo school district.

Since the Mt. Diablo school board no longer webcasts its meetings, I have begun recording portions and posting them for those who were unable to attend the meeting (or for those who want to review what happened).

Here’s a rundown of appointments made at the Sept. 27 meeting, as well as portions of the bond refunding presentation:

The board appointed Lorien Quirk as a behaviorist program manager (sorry, didn’t get video of that).

Trustees also appointed Bryan Cassin as a dispute resolution special education administrator:

The board appointed Billy Torres as an occupational therapist:

Trustees appointed Kerry Wayne Larion a trades supervisor (didn’t get video of that).

The board approved an easement at the PH Ed Center and approved bylaws for the 2002 Measure C Citizen’s Bond Oversight Committee (no video).

Trustees approved a resolution authorizing the issuance and sale of 2002 Measure C bonds not to exceed $100 million, after hearing a presentation from financial adviser Jon Isom. I recorded portions of Isom’s presentation.
Part 1:
Part 2:
After trustees approved the resolution, Isom asked for direction. Board President Gary Eberhart said: “It’s our expectation that you will do a good job.”

Do you think the district should refund the bonds?

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One Response to “MDUSD Sept. 27 appointments and bond refunding presentation”

  1. Gambling Says:

    It is clear the Board is not qualified to make a decision on the “advance refunding” of the 2002 Measure C bonds, which were sold in 2004. First of all, it is unusual to advance refund 2 years in advance of a call date. An investor and tax payer would not expect a school district to advance refund prior to a call date “just to save the tax payer money”. As Isom stated, advance refunding is “gambling”. See the link below and focus in on “Escrow Considerations” and the paragraph about negative arbitrage.

    Isom said there would be negative arbitrage. When the bonds are refunded, Isom will buy Treasury securities with the new bond sale and have the Treasuries sit in an escrow account. Principal and interest payments on the old 2004 bonds will be paid out of escrow, except that the interest owed on the old bonds will be greater than the interest earned on the Treasury securities. (Yields on 2 year treasuries is about .30% and 3% on 30 Year treasuries…the 2004 bonds interest rates are between 5% to 5.625%). That means that the interest earned from Treasuries in the escrow account will not be sufficient to pay off the old 2004 Bonds’ interest debt service, and someone has to make up the difference…and where is this going to come from? Negative arbitrage often erodes any potential savings the tax payer may realize from the advance refunding, and this risk increases with time. Refunding two years in advance is too long!!!! Oh, and Isom said there is an advance refunding “penalty” (more $$$). The only reason I can see the district deciding to do this is because Isom said they could issue more 2010 Measure C bonds if tax payers saved money from this refunding.

    I guarantee you that this advance refunding would have never occured had 2010 Measure C not passed. To any Board members that are reading this blog…I’d appreciate it if you do not gamble with our tax payer’s money, especially when you don’t know and understand all the risks!

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