A view of Madison Elementary School. The Madison school district has refinanced its 2013 bonds, saving taxpayers money in reduced interest, but officials say that taxpayer assistance might be needed in the future to help cover building repairs.

A view of Madison Elementary School. The Madison school district has refinanced its 2013 bonds, saving taxpayers money in reduced interest, but officials say that taxpayer assistance might be needed in the future to help cover building repairs.

Photo by Deb Jacques


Madison school district achieves savings on bonds

By: Andy Kozlowski | Madison - Park News | Published April 28, 2021

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MADISON HEIGHTS — The Madison District Public Schools will see savings of $747,000 in interest payments on school bonds, thanks to the recent sale of the district’s 2021 refunding bonds in the amount of roughly $9.6 million. The savings represent nearly 8% of the bonds that remain.

Cindy Holder, the president of the MDPS Board of Education, said she was pleased with the results of the sale. She also described other measures the district has taken to stabilize its finances.

“As stewards of the district, we look for savings anywhere we can,” Holder said in an email. “Recently we refunded — refinanced — the remaining bonds on the elementary school to take advantage of the lower interest rates. This should save the taxpayers nearly $1 million over the life of the bonds. In addition, the sale of Edison Elementary to the charter school (Keys Grace Academy) will net the district $1.9 million over 10 years.

“Our administrative staff has taken advantage of any and all additional monies available for government COVID funding,” she added. “Controlling cost is a vital tool in keeping the district in the black compared to previous years. Even with these actions, because of past neglect, we still have some major repairs that need to be addressed. Our position is to find the best way to accomplish this with minimal impact to the taxpayers.”

According to an audit conducted by Plante Moran in 2019, the district had a surplus of nearly $3.3 million in 2012 but was overspending up through the 2019 fiscal year. When a new board and superintendent took power in early 2019, they found the district teetering on the brink of deficit, with a deficit of $1.5 million projected for the following year.

Angel Abdulahad, who became superintendent that year, implemented a sweeping series of corrective measures to stave off a deficit that included cutting $1.5 million from the 2019-20 school year budget. Since then, the district has been attempting to bolster its fund balance in order to be taken off a state watch list that requires districts to have 5% or more of their expenditures in savings.

Fast forward to recent times and the district has achieved that goal, coming off the state’s watch list with a fund balance now approaching 10%.

The sale of the refunding bonds represents the latest effort to rebuild the district’s finances. The bonds were issued for the purpose of refunding the district’s callable 2013 school building and site bonds.

The district and its municipal advisor, PFM Financial Advisors, prepared for the sale by requesting a credit rating from S&P Global Ratings, which would determine its qualification for the Michigan School Bond Qualification and Loan Program. S&P affirmed the MSBQLP rating of “AA” and assigned the district an underlying rating of “BBB+.”

The district’s financing was conducted by the Michigan investment banking office of brokerage firm Stifel, along with PFM Financial Advisors. Thrun Law Firm P.C. served as the bond counsel.

The 2021 bonds sold at a federally taxable interest rate of 2.67%, with a final maturity of 2043, for a repayment term of about 22 years.

“The refunding alone shows our community that we are trying to be good stewards of the taxpayer dollars,” Abdulahad said in an email. “To control costs, we have done a facility assessment that has given us insight on what needs to be taken care of with infrastructure. In addition, we have implemented a policy that requires multiple quotes prior to work being selected and started. We have also seen a positive uptick on our student enrollment — approximately a 24-student increase in second semester enrollment — and we anticipate that to increase next school year.”

He said that the biggest challenge currently facing the district relates to infrastructure.

“The high school is in need of a new roof, heating and cooling needs upgrading, and all of our main line pipes need major upgrades, along with upgrading lighting and electrical,” Abdulahad said. “We are attempting to handle some of the classroom items internally — Smart Boards, new tech for our students, new curriculum. However, we may have to go to our taxpayers for some assistance.”

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