Number
030301
Version
Substitute 1
Reference
Sponsor
THE CHAIR
Title
Substitute resolution authorizing issuance of short-term promissory notes under sec. 67.12(1), Stats., for the purpose of financing the operating budget of the Milwaukee Public Schools on an interim basis. (Comptroller's Office)
Analysis
This resolution authorizes the City of Milwaukee to issue short-term promissory notes under sec. 67.12(1), Stats., for the purpose of financing the operating budget of the Milwaukee Public Schools on an interim basis. The resolution pledges revenues payable to the School Operations Fund during fiscal year 2003-2004 to the payment of debt service on such notes. This resolution authorizes and directs the proper City officers to segregate state general school aid revenues payable to the School Operations Fund during June of 2004 to secure payment of the principal of the notes at maturity; pledges surplus revenues in the Debt Service Fund to pay interest on the notes at maturity; and authorizes the proper City officers to create a separate account in the Debt Service Fund in the amount of the accrued interest on the notes to maturity for the purpose of paying the interest on the notes upon maturity. Finally, this resolution authorizes the proper City officers to deposit with a trustee an amount sufficient together with earnings thereon to pay the principal and interest due on such notes at maturity.
Body
Whereas, The Milwaukee Public Schools is a department of the City of Milwaukee (the "City") authorized by secs. 65.05 and 119.46, Stats., to determine its expenditures and the taxes to be levied therefor; and
Whereas, The Milwaukee Public Schools operates on a fiscal year commencing July 1, 2003 through June 30, 2004 (the "Fiscal Year"); and
Whereas, Section 119.46, Stats., establishes a School Operations Fund and authorizes the Milwaukee Public Schools to establish the amount of money therefor required for the ensuing school year and the amount of property tax to be levied therefor; and
Whereas, The anticipated state general school aid revenue payments for the School Operations Fund for the Fiscal Year amount to $606,495,816; and the anticipated state general school aid revenue payments under sec. 121.15, Stats., represent 66% of the anticipated revenues for the School Operations Fund for the Fiscal Year; and
Whereas, The Milwaukee Public Schools is anticipating the receipt of state general school aid revenues from the State of Wisconsin in September, December, March, and June of the Fiscal Year, and specifically in the amount of $200,143,619 in June, 2004; and
Whereas, Operating expenses are incurred on a uniform basis throughout the school year; and
Whereas, The City of Milwaukee is a municipality authorized to borrow money for school purposes; and
Whereas, Section 67.12(1), Stats., authorizes the City to borrow money for the School Operations Fund in anticipation of receiving payments of state general school aid revenues as hereinbefore referred to; and
Whereas, The Board of Directors of Milwaukee Public Schools is scheduled to discuss on June 26, 2003 a resolution that determines that it will be necessary to finance the operating budget of the Milwaukee Public Schools on an interim basis between now and the receipt of state general school aid revenues during the Fiscal Year (the "MPS Resolution"); and
Whereas, Upon adoption of the MPS Resolution, the Administration of the Milwaukee Public Schools shall requested that the City issue notes pursuant to sec. 67.12(1), Stats., to finance the operating budget of the Milwaukee Public Schools on an interim basis pending receipt of state general school aid revenues; and
Whereas, The purpose of this resolution is to authorize the sale of such notes, to authorize and direct the pledging of revenues of the School Operations Fund to the payment of debt service on such notes, to authorize and direct the segregation of state general school aid revenues due and payable in June, 2004 within the School Operations Fund to the payment of the principal of such notes at maturity and to pledge and segregate in a separate account in the Debt Service Fund an amount sufficient to pay the interest on such notes at maturity; now, therefore, be it
Resolved, By the Common Council of the City of Milwaukee, that it hereby and herewith authorizes and declares its purpose to issue short-term promissory notes pursuant to the provisions of sec. 67.12(1), Stats., in an amount not to exceed $150,000,000, which is less than 60% of anticipated receipts for the Fiscal Year, for the purpose of financing the operating budget of the Milwaukee Public Schools on an interim basis pending receipt of state general school aid revenue payments during the Fiscal Year; and, be it
Further Resolved, That said promissory notes be sold by the Commissioners of the Public Debt at a true interest cost not to exceed 3.00% at public competitive sale; or to the Public Debt Amortization Fund for the purpose of investment; or to the Public Debt Amortization Fund for immediate cancellation; and, be it
Further Resolved, That said promissory notes shall be dated no later than September 30, 2003, shall have a maturity not to exceed one year, shall be registrable in the name CEDE & Co. as nominee of the Depository Trust Corporation, New York, New York, shall bear interest at a rate not to exceed 6.00% per annum, and shall not be subject to redemption prior to maturity; and, be it
Further Resolved, That said promissory notes shall be designated Short-Term School Order Notes, Series 2003 M with a numerical suffix as determined by the Commissioners of the Public Debt, and notes in each series shall be numbered consecutively beginning with the number 1; and, be it
Further Resolved, In accordance with authorization from the Board of School Directors of the Milwaukee Public Schools, that the Common Council hereby declares that it will irrevocably pledge all revenues of the School Operations Fund due and not yet paid as of the date of delivery of and payment for the notes and which are not otherwise applied through June 30, 2004 (the "End of the Fiscal Year") as security for repayment of such obligations; and, be it
Further Resolved, That in accordance with authorization from the Board of School Directors of the Milwaukee Public Schools for the purpose of securing payment of principal on each of said notes as the same fall due, the proper City officers are hereby authorized and directed to segregate through the End of the Fiscal Year within the School Operations Fund state general school aid revenue payments under sec. 121.15, Stats., received in June, 2004, in the amount of the principal obligation of the short-term promissory notes; and, be it
Further Resolved, That surplus revenues in the Debt Service Fund be and hereby are pledged to the payment of accrued interest on the short-term promissory notes at maturity, and that the proper City officers be and hereby are authorized and directed to create a separate account in the Debt Service Fund from surplus revenues within the fund in the amount of accrued interest to maturity for the purpose of paying the interest on the short-term promissory notes upon maturity; and, be it
Further Resolved, That the proper City officers be and hereby are authorized and directed to deposit with a trustee on or before the End of the Fiscal Year pledged revenues to purchase direct obligations of the U.S. Government in an amount sufficient together with earnings thereon to pay the principal and interest due on such notes at maturity; and, be it
Further Resolved, That said notes are not intended to be arbitrage notes and that there is no reasonable expectation of the City realizing arbitrage proceeds; and, be it
Further Resolved, That the addendum to the agreement by and between the City and J.P. Morgan Chase Bank (the "Addendum"), a copy of which is attached to this file, be and hereby is approved, and the proper City officers be and hereby are authorized and directed to execute the same on behalf of the City; and, be it
Further Resolved, That should the notes mature on or before the End of the Fiscal Year as determined by the Commissioners of the Public Debt, City officers may determine whether it is desirable or not to have a trustee to make the payment on the Notes. If it is determined that a trustee is not desirable, the City officers need not execute the Addendum, and are directed to pay directly the principal and interest due on such notes at maturity; and, be it
Further Resolved, That such short-term promissory notes shall not constitute an indebtedness for purposes of determining the municipality's constitutional debt limitation, and no tax shall be levied to pay such obligations; and, be it
Further Resolved, That the City Comptroller be and hereby is authorized and directed to prepare the official statement in connection with the issuance of such notes and to execute on behalf of the City all certifications which may be required in connection with the official statement; and, be it
Further Resolved, That the City covenants to take all actions necessary to preserve the exemption of interest on the notes from federal income taxation. No use of the proceeds of the sale of the notes shall be made which, if such use had been reasonably expected on the date of issue of the notes, would have caused such notes to be "arbitrage bonds" as defined in Subsection (d)(2) of Section 103 and Section 148 of the U.S. Internal Revenue Code of 1986. The City shall comply with the requirements of Sections 141 through 150 of said Internal Revenue Code and the applicable regulations of the Internal Revenue Service adopted thereunder throughout the term of the notes. The provisions of this section shall be a covenant with the purchasers of the notes; and, be it
Further Resolved, That a Continuing Disclosure Certificate, in substantially the form as customarily provided, be dated the date of initial delivery of the Notes, is hereby authorized to be executed and delivered by the Comptroller; and, be it
Further Resolved, That the obligation of the City under the aforementioned disclosure certificate under the terms therein specified be and hereby is determined to be contractual for the benefit of the note holders from time to time; and, be it
Further Resolved, That the City hereby authorizes and directs the appropriate officers and employees of the City to take all action necessary or appropriate to comply with and carry out all of the provisions of the Continuing Disclosure Certificate as amended from time to time. Notwithstanding any other provision of the resolution, failure of the City to perform in accordance with the Continuing Disclosure Certificate shall not constitute a default under the resolution and the Continuing Disclosure Certificate may be enforced only as provided therein.
Requestor
Comptroller
Drafter
RSL
PD-6531aW.doc