MRHS bonding to begin before rates climb
Date: 1/17/2011Jan 17, 2011
By Chris Maza
Reminder Assistant Editor
WILBRAHAM The Hampden-Wilbraham Regional School Committee voted to begin actively trying to sell bonds in order to finance the building of the new Minnechaug Regional High School.
At its Jan. 11 meeting, the committee decided to approve the commencement of the process to "secure partial financing, using permanent bonds" with an interest rate "not to exceed 5.2 percent through a competitive bid process."
Committee Chair Peter Salerno explained that it appeared the "sweet spot has passed" for taking advantage of low interest rates, as rates have already begun to climb close to 4.5 percent.
"A year from today, the rate will not be less than the current rate," Salerno said, concluding a statement on the current bond climate and forecasts on its future.
The Hampden-Wilbraham Regional School District (HWRSD) will now begin looking for bids on bonds, which will cover approximately $22 million of the total cost of the building project. In total, the committee and the district anticipate financing somewhere between $29 million and $30 million.
The School Committee reserves the right to reject any and all bids.
"We are not committing to borrow," explained Salerno. "We are committing to getting the process moving forward."
HWRSD currently has a credit rating of Aaa3, according to Superintendent M. Martin O'Shea, who added that the district will go to Moody's, a company that measures an entity's creditworthiness, to reestablish that rating.
An Aaa rating is "judged to be of the highest quality, with minimal credit risk," according to Moody's Web site.
A second vote made by the School Committee authorized the HWRSD treasurer to use the state's Aaa2 rating, should the district's rating be downgraded by Moody's, which O'Shea felt was very unlikely.
In other money matters, O'Shea braced the committee for expected cutbacks from the state.
According to O'Shea, the district should expect cuts in the Chapter 70 funding HWRSD's main source of state funds to be in the range of 5 to 10 percent. The district must wait until the governor's office releases their budget, which is expected the last week of January.
"That will be the first concrete information we can work of off," O'Shea said.
Both Salerno and O'Shea praised the principals and the rest of the district for its ability to deal with tight budgets over the past few years, but Salerno warned that this may be the "most difficult budget to manage in the past several years."
O'Shea concurred, stating, "We have done well in keeping reasonable, manageable class sizes, but it's unclear whether or not we can maintain these levels."
In order to help ease the budget woes, O'Shea asked the committee for feedback on the idea of adding four new early release days to the 2011-2012 school calendar.
According to O'Shea, current budget shortfalls restrict the number of substitutes that can release teachers and give them the opportunity to take part in professional development opportunities. By instituting these early release days, it would free up teachers schedules to take advantage of professional development opportunities at the school.
The committee expressed support for the proposal and asked for more information to be discussed at a later meeting.