Number
031037
Version
SUBSTITUTE 1
Reference
Sponsor
THE CHAIR
Title
Substitute resolution approving the terms and authorizing the execution and delivery of a swap agreement of the City on behalf of the Milwaukee Board of School Directors. (Comptroller)
Analysis
This resolution authorizes entering into a Swap related to the issuance of up to $200,000,000 of General Obligation Notes ("Notes") and/or Redevelopment Authority of the City of Milwaukee Bonds ("Bonds") for the purpose of paying Milwaukee Public School's ("MPS") unfunded prior service liability ("UPSL") to the Wisconsin Retirement System ("WRS"). The Notes and Bonds will provide the amount required to payoff the UPSL, which is estimated at $167,364,354 as of June 30, 2003.
Under current WRS 2% payment requirement, interest assessment, and assuming a 3% growth in MPS covered payroll, the UPSL will never be paid off. With the combined City and RACM financing, the total debt service will approximate the projected WRS payments, and be fully retired in 40 years.
Part of the RACM Bonds will be issued as variable rate Auction Rate Securities. The proposed Swap will covert the variable rate obligation into a fixed rate obligation. MPS will pay the Swap a fixed rate of interest, and MPS will receive from the Swap a variable rate of interest. The variable rate of interest received on the swap will approximate the variable rate of interest paid on the Auction Rate Securities. The variable rate received and paid substantially offset each other, and the net effect is a fixed rate obligation to the Swap.
Body
Whereas, Pursuant to Section 119.50 of the Wisconsin Statutes, the City of Milwaukee, Wisconsin (the "City") through its Treasurer holds all school moneys of the Milwaukee Board of School Directors ("MPS"), such moneys to be disbursed by the City Treasurer on the written order of the Superintendent of Schools, countersigned by the auditing officer of the City; and
W...
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