Number
100279
Version
ORIGINAL
Reference
Sponsor
THE CHAIR
Title
Resolution authorizing the issuance and sale of up to $253,000,000 of revenue anticipation notes and General Obligation Promissory Notes for the purpose of financing the operating budget of the Milwaukee Public Schools on an interim basis.
Analysis
This resolution authorizes the City of Milwaukee to issue school revenue anticipation notes (RANs) under Section 67.12(1), Wisconsin Statutes, 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 the fiscal year 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 to the School Operations Fund in June of 2011 to secure payment of the principal of the RANs at maturity, and pledges surplus revenues in the Debt Service Fund to pay interest on the RANs to maturity. Finally, this resolution 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.
In today’s interest rate environment, the interest cost on the RANs is higher than the interest earned on the proceeds prior to realizing the deficit. As such, it is to the City’s advantage to delay the issuance of the RANs as long as possible. By using the City’s Commercial Paper (CP) program, a lower amount of debt can be issued (approximately $75 to $100 million) in September. The CP would permit delaying the issuance of the $253 million of RANs until as late as October. The CP would be paid off with the proceeds of the RAN issue. The net benefit of delaying the issuance of the RANs is approximately $50,000 per month.
Body
Whereas, The Milwaukee Public Schools (the “MPS”) is a department of the City of Milwaukee (the “City”) authorized b...
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