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The original item was published from 12/10/2009 10:45:34 AM to 12/18/2009 12:00:09 AM.

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Posted on: December 10, 2009

[ARCHIVED] Madison Learns More About New School Funding

--City, School, and State Officials Meet to Discuss New Details

MADISON, AL - In a meeting Wednesday afternoon with Craig Pouncey, Assistant State Superintendent, Madison city officials learned more about the $36 million Qualified School Construction Bond interest free loan they received last month. The group, including Mayor Paul Finley, City Council President Bill Holtzclaw, Superintendent Dr. Dee Fowler, and several other city and school officials had asked for the meeting to follow up on a December 7, 2009 memo by Alabama Superintendent of Education Dr. Joe Morton.

Pouncey enlightened the group on the December 3rd issuance by the Alabama Public School and College Authority of the series 2609-D Qualified School Construction Bonds which is the first of two the state will conduct. Madison’s funds will be part of the second issuance scheduled for March 2010.

Officials learned that the first issuance included a supplemental interest coupon of 1.865% to be paid by the borrowing local schools starting in December 2011. The two-year deferral thus provides an effective borrowing cost of 1.19%. Translation…had Madison been in the first issuance, they would be responsible for an additional $428,400 per year.

Pouncey further explained that the supplemental coupon was needed to attract buyers. The US Treasury adjusts the tax credit rate daily and their recent “lower adjustment” dictated the need for a supplemental coupon. Earlier this year, Wyoming sold their Qualified School Construction Bonds and there was no need for a supplemental coupon. Pouncey explained market conditions have changed since then.

Madison officials were appreciative of Pouncey’s willingness to immediately come up and explain the evolving situation. “This is different from what council signed up to and what we advised the public on” said Bill Holtzclaw, Madison City Council President. “While 1.19% would still be a great deal for the city, the fluid rates cause concern.” Madison Mayor Paul Finley added, “We have worked to involve the community from the start and this news will not be treated differently. The minute we know, they will know” said Finley.

Holtzclaw, Finley, Fowler, and others will be meeting with state finance officials later today to learn more about this issuance and their upcoming issuance in spring 2010.

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