Number
250252
Version
SUBSTITUTE 1
Reference
Sponsor
THE CHAIR
Title
Substitute resolution authorizing the issuance of up to $275,000,000 of school revenue anticipation notes, and a purpose for Direct Loan Notes, for the purpose of financing the operating budget of the Milwaukee Public Schools on an interim basis.
Sections
Analysis
This resolution authorizes the issuance by the City of Milwaukee, Wisconsin (the “City”) of its school revenue anticipation notes in the aggregate principal amount of up to $275,000,000 (the “RANs”), under Section 67.12(1) of the Wisconsin Statutes, for the purpose of financing the operating budget of the Milwaukee Public Schools (“MPS”) on an interim basis.
This resolution pledges revenues payable to the School Operations Fund during the Fiscal Year (as defined below) to the payment of debt service on the RANs. This resolution authorizes and directs the proper City officers to segregate state general school aid revenues payable under Section 121.15 of the Wisconsin Statutes to the School Operations Fund in June of the fiscal year commencing July 1, 2026 and ending June 30, 2027 (the “Fiscal Year”) to secure payment of the principal of, and interest on, the RANs when due. This resolution also authorizes the proper City officers to deposit with the City’s fiscal agent an amount sufficient together with earnings thereon to pay, when due, the principal of and interest on the RANs.
Finally, this resolution authorizes, within the existing $400,000,000 aggregate program limitation established by Resolutions 180864, 210940, 221095 and 251400, the use of up to $150,000,000 of Direct Loan Notes to provide temporary bridge financing for School Purposes pending issuance of the RANs.
Body
Whereas, MPS operates under Chapter 119 of the Wisconsin Statutes as the school system of a First Class City and is legally treated as a department of the City of Milwaukee, and accordingly the City is the “municipality” authorized to borrow money in anticipation of revenues under Section 67.12(1)(a) of the Wisconsin Statutes;
Whereas, the Milwaukee Board of School Directors (the “Board”) has determined that MPS is temporarily in need of funds in the principal amount not to exceed $275,000,000 to meet the immediate expenses of operating and maintaining the public instruction in MPS (“School Purposes”) during the Fiscal Year;
Whereas, the City deems it necessary and in the best interest of the City and MPS that funds be borrowed and RANs be issued pursuant to the provisions of Section 67.12(1)(a) of the Wisconsin Statutes to borrow money in anticipation of revenues for School Purposes;
Whereas, Section 67.12(1)(a) of the Wisconsin Statutes provides that obligations issued thereunder shall not exceed 60% of the municipality’s total actual and anticipated receipts for the fiscal year in which the obligations are issued, and the Comptroller has certified (or shall certify prior to issuance) that the aggregate principal amount of RANs to be issued hereunder does not and will not exceed 60% of the City’s total actual and anticipated receipts attributable to the Fiscal Year;
Whereas, the Commissioners of the City’s Public Debt Commission (the “PDC”) are authorized and directed by the City to determine and approve the final terms of the RANs;
Whereas, the City may use general obligation debt to temporarily provide revenue anticipation financing for School Purposes, and the City desires to provide bridge financing pending RAN issuance through its existing Master Direct Loan Program;
Whereas, Resolutions 180864, 210940, and 221095 collectively authorize up to $400,000,000 of general obligation promissory notes outstanding from time to time that secure draws on the City’s lines of credit (the “Direct Loan Notes”), and sufficient unused capacity exists under that aggregate program limitation to accommodate up to $150,000,000 of temporary financing for School Purposes;
Whereas, the Board adopted a resolution on 5/28/2026 (the “MPS Board Resolution”), authorizing MPS’s request for RAN financing for the Fiscal Year and MPS’s agreement to pay both the principal of and interest on the RANs from revenues of the School Operations Fund, a copy of which is on file with the City Clerk and incorporated herein by reference; and
Whereas, the pledge of School Operations Fund revenues to the payment of both principal of and interest on the RANs set forth in this resolution is consistent with, and given pursuant to, the authorization contained in the MPS Board Resolution; now, therefore, be it
Resolved, that: Up to $150,000,000 of Direct Loan Notes may be issued, at the discretion of the City’s Comptroller, to provide temporary financing for School Purposes pending the issuance of the RANs. Such $150,000,000 shall be issued within, and shall not increase, the aggregate $400,000,000 program limitation previously authorized by Resolutions 180864, 210940, and 221095, and the Comptroller shall confirm sufficient unused capacity exists under that program prior to any draw for School Purposes. Consistent with the delegation of authority to the Comptroller under Resolutions 180864, 210940, and 221095 for draws under the City’s Master Direct Loan Program, no separate approval of the Commissioners of the PDC is required for the issuance of this temporary financing. The amount of RANs issued to refund temporary financing used to pay School Purposes shall be included within, and count against, the $275,000,000 aggregate amount of RANs authorized to be issued hereunder, it being the intent that the $275,000,000 RAN authorization is sufficient in the aggregate to both refund any Direct Loan Notes issued for School Purposes and fund the remaining anticipated School Purposes expenses for the Fiscal Year. For budgetary reporting purposes only, the portion of RAN proceeds used to refund temporary financing shall be characterized as “refunding purposes”; and be it
Further Resolved, the RANs shall be issued to pay School Purposes pursuant to the provisions of Section 67.12(1) of the Wisconsin Statutes and the MPS Board Resolution, as follows:
1. It is hereby delegated to the Commissioners of the PDC the power with respect to the RANs to determine, approve, and carry out the final terms of the RANs, subject to the parameters set forth below.
2. The RANs shall be issued on or before March 1, 2027.
3. The RANs shall be sold at a price of not less than par and accrued interest thereon and shall bear interest payable semi-annually or at maturity and shall bear coupon rates not to exceed 7% per annum (on an aggregate basis), with an issue true interest cost not to exceed 5% per annum (on an aggregate basis).
4. The Commissioners of the PDC shall establish the due date(s), which shall occur no later than December 31, 2027, and may establish redemption dates at par, for the RANs.
5. In accordance with authorization from the Board as set forth in the MPS Board Resolution, the Governing Body hereby declares that it irrevocably pledges as security for the repayment of the RANs and interest thereon, revenues of the School Operations Fund attributable to the Fiscal Year which are payable to MPS in the Fiscal Year, but are not yet received by MPS as of the date of issuance of the RANs, which revenues shall not be pledged and/or applied for any other purpose until a sufficient amount of such revenues are set aside for payment in full of the principal of and interest on the RANs. This pledge is consistent with, and given pursuant to, the authorization contained in the MPS Board Resolution.
6. The City shall covenant (on its behalf and on behalf of MPS) with the holders from time to time of tax-exempt RANs that it will comply with the provisions of Sections 103 and 141 through 150 of the Internal Revenue Code of 1986, as amended (the “Code”), and the applicable regulations of the Internal Revenue Service adopted thereunder, that must be satisfied in order that interest on said RANs shall be and continue to be excluded from gross income for federal income tax purposes under Section 103 of the Code.
7. Prior to the issuance of the RANs, the City Comptroller (or the MPS Chief Financial Officer, as applicable) shall deliver to the PDC a certificate confirming that the aggregate principal amount of the RANs to be issued, together with any Direct Loan Notes then outstanding for School Purposes, does not exceed 60% of MPS’s total actual and anticipated receipts for the Fiscal Year, as required by Section 67.12(1)(a) of the Wisconsin Statutes.
Requestor
Comptroller
Drafter
Comptroller
Jesse Hagen-8743W.rtf