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Story Archives: Parish school system secures better bond rating


Parish school system secures better bond rating
by Scott Rogers - posted Wednesday, December 3rd, 2008 @ 8:28 pmE-mail Story E-mail Story | Print Story Print Story 
Ouachita Parish Schools has earned a rare distinction in Louisiana, becoming just the fourth school system to have an AA- general obligation tax bond rating.

That announcement was made Tuesday by Grant Schlueter of the law firm Foley and Judell of New Orleans, which acts as the school board's bonding attorney. Schlueter delivered the news at the Ouachita Parish School Board's regular meeting.

Standard & Poor's, a national bond rating agency, recently upgraded the school system's bond rating from an A- to the AA- bond rating after reviewing the financial operations at the parish school system.

School board officials met with Standard & Poor to request an upgrade in the school system's bond rating.

"After meeting with Standard & Poor's and providing financial information and other materials, the rating agency upgraded your bond rating three notches, which is almost unheard of," Schlueter said.

He said the highest bond rating for any governmental agency in the state is an AA.

There are only three other schools systems in the state that have an AA bond rating. They are the St. Tammany Parish, Jefferson Parish and Caddo Parish school systems.

"Breaking this double A category is very, very significant," Schlueter said. "Even if it's a minus, breaking into this category makes a big difference with what bidders bid, so this is very, very positive."

The improved bond rating means parish schools will pay less interest expense on the sale bonds, which will finance construction projects at eastern Ouachita schools. The improved bond rating also means the parish school system will have more money available for construction projects instead of paying interest expenses on the sale of bonds.

Schlueter said the new bond rating was due to the "sound financial performance of the school board, the low debt burden to taxpayers compared to what is seen around the country, and most importantly, your healthy fund balance."

Superintendent Dr. Bob Webber was ecstatic about the new bond rating, saying it would help save taxpayers more money.

"It's going to save the taxpayers a lot of money over the history of the bond, which is 25 years," Webber explained. "We're tickled to death with it. We didn't really expect it, but we think it's a sign that our school board is very sound financially.

"I congratulate the school board and our business department for their great efforts. Especially during these economic times, for them to say that we're so sound they're willing to upgrade our rating, that's just tremendous."

Many governmental agencies across the nation are struggling to get good interest rates on bond sales due to the poor credit market, Schlueter said.

"You know how the credit markets are now and how tight credit is, and most of the bond sales over the last month have been postponed due to the market conditions," he said. "Others are shortening up bond issues to try and sell them. Also, another trend has been only one bidder for bond issues."

On Tuesday, the school board received three bids to buy $9.7 million in general obligation bonds, which will help pay for renovations and two new schools in eastern Ouachita Parish.

Those bonds were sold to the low bidder Morgan Keegan, which submitted the lowest interest rate at 4.67 percent.

"I think one of the reasons we had a good bond sale today is because of what happened with your bond rating," Schlueter said. "There was a lot of interest and a lot of bidders, and your bond rating had a lot to do with it. This 4.67 percent for a long bond issue - 25 years - in this market is extremely good."

The sale of $9.7 million in general obligation school bonds is part of the property tax that eastern Ouachita voters extended last year. The property tax was extended seven more years to give the school board roughly $30 million for the construction of a new elementary school in Sterlington, a new middle school in Richwood and renovations to the existing eastern Ouachita schools.
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