Eastpointe school district appoints adviser for short-term investing of bond funds

By: Maria Allard | Roseville-Eastpointe Eastsider | Published March 6, 2024


EASTPOINTE — An investment adviser will help Eastpointe Community Schools with its $36.4 million bond issue that passed at the polls Aug. 8, 2023.

At the Feb. 26 Board of Education meeting, the school board voted 7-0 to adopt a resolution to appoint the advisory, tax and assurance firm Baker Tilly, which has locations across the country including an office in Southfield, as the district’s investment adviser.

At the meeting, Robert Carlesso, the district’s executive director of business and operations, said the bonds will be sold in two series. That’s where the investment adviser comes into play.

“The first (series) for $20 million occurred in January,” Carlesso said, adding that the proceeds were expected Feb. 28. “Once that money comes in, we want to put it to work and gain some interest. We’re not really going to start drawing on that money for a few more months, so in the meantime we’d like to invest it in safe but high-yielding investments.”

  According to Carlesso, Baker Tilly provides a portfolio called Michigan CLASS, which invests in commercial paper and other government obligations. CLASS stands for “Cooperative Liquid Assets Securities System.” Commercial paper is a short-term, unsecured debt instrument often used for the financing of short-term liabilities.

“We’re going to monitor the interest rate environment because currently short-term investment portfolios pay more interest than a one- or two-year investment,” Carlesso said. “So at such times that the market flips, then we’ll look at investing some of that money longer term. But for now the Michigan Class portfolio pays the highest interest rate that we could get for the next three to four years.”

“We basically have to do this type of thing anyways because we can’t just take this money and plop it in the bank,” school board President Jon Gruenberg said. “It would never be protected. We can’t just take the money they give us and plop it and let it sit there until we need to use it, because that money would not be guaranteed at the level of the amount of money that we’re putting in. This way we’re putting it into something that hopefully will turn into more money.”

“That interest that we earn on it can be (put) back into the projects that the bond was intended for,” Carlesso said.

A bond proposal is developed by the school district and presented to the voters for approval. When a bond proposal passes, the bonds are sold in the capital markets at a date determined by the district, a financial adviser and an underwriter. Upon closing, funds generated from the bond sale are deposited in the district’s construction fund and are available to spend for completion of the projects contemplated in the bond proposal.

Bond dollars will be used for safety and security improvements, facility upgrades and technology updates throughout the district. That includes everything from roofing to heating and cooling to playgrounds. Projects are scheduled for all nine buildings in the district, including four elementary schools, Eastpointe Middle School, Eastpointe High School, the Early Learning Center, the Alternative Center, and the operations and transportation building.