FILE: DE
Cf: DFD
DEBT LIMITATION
The East Feliciana Parish School Board (EFSB) may, as authorized by the Constitution and laws of the State, borrow money, incur debt, issue bonds, levy taxes, or pledge uncollected taxes or revenues, with the approval of the electorate and the consent of the State Bond Commission. Before incurring any form of debt whatsoever, the School Board is required by law to obtain the consent and approval of the State Bond Commission.
Notification to the State Bond Commission shall be required by the School Board whenever the transfer of funds authorizing indebtedness or payment on outstanding indebtedness has not been made in a timely manner.
CONDITIONS FOR DEBT ISSUANCE
The East Feliciana Parish School Board shall consider the following factors to ascertain if debt should be issued:
Project characteristics and useful life,
Existing debt and approved debt limits,
Identification of a funding source to repay the debt,
Type of debt instrument,
Interest rates, construction costs, and other market conditions, and
Length of the issuance.
Project Characteristics and Useful Life
The East Feliciana Parish School Board may issue debt for major capital projects with a useful life of at least 10 years, primarily (1) acquiring or improving lands for building sites, and (2) purchasing, erecting, or improving school buildings and other school-related facilities and acquiring the necessary equipment and furnishings therefor. Debt shall not be issued to fund recurring expenditures, such as operations or maintenance. However, in the event a high-priority improvement is needed and current resources are inadequate, debt may be issued. The term of any bond issue shall not exceed the useful life of the capital project or facility for which the borrowing is intended.
Debt may also be issued to retire existing, higher-interest debt at a lower borrowing rate or to restructure existing debt.
Consideration of Existing Debt and Approved Debt Limits
Once the proposed project is deemed to have met the project criteria to issue debt (and adequate consideration has been given to using alternative funding sources, such as current resources, fund balance, and anticipated short-term revenues), the Superintendent and contract Certified Public Accountant (CPA) shall perform calculations to ensure that proposed outstanding debt limits do not exceed the statutory limitations:
La. Rev. Stat. Ann. §39:562 establishes a legal debt limit of fifty percent (50%) of the assessed valuation of the taxable property within the parish as ascertained by the last assessment for the parish.
For bonds funded by sales tax revenues, La. Rev. Stat. Ann. §47:338.68 establishes a debt limit of seventy-five percent (75%) of the avails of the tax.
Identification of a Funding Source to Repay the Debt
Before the East Feliciana Parish School Board issues debt it shall identify a funding source to repay the debt. Funding sources may include an authorized sales or ad valorem tax or general fund revenues. Earnings on invested sinking funds shall be used solely to service the debt.
Type of Debt Instruments
The East Feliciana Parish School Board may issue general obligation debt for capital or other properly approved projects. In emergency situations sales tax, general fund, or limited tax debt may be issued.
No debt shall be incurred without approval of the Superintendent.
The issuance of derivative debt instruments shall be prohibited. The use of swaps and variable rate debt instruments shall also be prohibited.
Before incurring any form of debt whatsoever, consent and approval of the State Bond Commission shall be obtained in compliance with La. Rev. Stat. Ann. §39:1410.60.
Market Conditions
Whenever possible, market conditions, such as interest rates and construction costs, shall be considered in the decision whether or not to issue debt, the timing of the issuance, the method of sale, redemption features, and the use of credit enhancements, with the goal of keeping costs (borrowing, issuance, construction, etc.) to a minimum while providing the resources necessary and in a timely manner for the East Feliciana Parish School Board to operate effectively and efficiently.
Refunding Debt
When a refunding is undertaken to generate interest rate cost savings, the minimum aggregate present value savings shall be 3% of the refunded bond principal amount. The present value savings shall be net of all costs related to the financing
Refunding for restructuring purposes shall be limited to restructuring to alleviate debt service during difficult budgetary years, achieve cost savings, mitigate irregular debt service payments, release reserve funds, or remove unduly restrictive bond covenants.
The preferred method of sale is via competitive sale to underwriters. If deemed advantageous, bonds may be sold via a negotiated sale, private placement, or other method. Coordination shall be made with bond counsel and the financial advisor in arriving at a recommendation to issue bonds through a method other than competitive sale.
Length of Issuance
Debt shall be amortized for the shortest period consistent with a fair allocation of costs to current and future beneficiaries or users, and in keeping with other related provisions of this policy. Generally, the period for which debt shall be issued is the shorter of the life of the asset it is financing or twenty (20) years. Debt periods shorter than the asset’s life shall also be acceptable and encouraged.
To the extent possible “back-loaded” or “ballooning” repayment schedules should be avoided.
PROFESSIONAL SERVICES
The EFSB Department of Business Services shall be responsible for the solicitation and selection of professional services that are required to administer the debt program.
Bond Counsel – All debt issued by the East Feliciana Parish School Board shall include a written opinion by bond counsel affirming that the School Board is authorized to issue the proposed debt. The opinion shall include confirmation that all city and state constitutional and statutory requirements necessary for issuance have been met, a determination of the proposed debt’s federal income tax status, and any other components necessary for the proposed debt.
Financial Advisor – A financial advisor may be used at the discretion of the Department of Business Services, with approval of the Superintendent on a case-by-case basis to assist in the issuance of debt. The financial advisor shall provide objective advice and analysis on debt issuance. This shall include, but shall not be limited to, monitoring market opportunities, structuring and pricing debt, and preparing official statements and disclosures.
Underwriters – An underwriter shall be used for all debt issued in a negotiated or private placement sale method. The underwriter shall be responsible for purchasing negotiated or private placement debt and reselling the debt to investors.
Fiscal Agent – A fiscal agent shall be used to provide accurate and timely securities processing and timely payment to bondholders.
RECORDKEEPING
The School Board shall continuously maintain:
A list of all Louisiana municipal securities for which the School Board is the issuer or is obligated to repay;
A copy of all continuing disclosure agreements relating to the securities to which the School Board is a party;
If, pursuant to a continuing disclosure agreement in which the School Board is a party, the School Board shall be responsible for filing notices of changes in bond ratings, a list of current ratings for such securities, if any.
All records required to be kept by the School Board under state law shall be subject to inspection by the legislative auditor and/or the School Board’s auditor.
Municipal securities shall mean bonds, notes, certificates, or other written obligations for the repayment of borrowed money, including obligations to refund any security, which are issued by the School Board.
Post Issuance Compliance and Disclosures
The School Board shall maintain communication with bond rating agencies to keep them abreast of its financial condition by providing them with the annual Audit Report or Comprehensive Annual Financial Report and annual budget, which shall also be posted on the School Board’s website. The School Board shall continually strive to maintain its bond rating by improving financial policies, budgets, forecasts, and its financial health.
The School Board shall comply with all covenants stated in the bond resolutions, contracts, etc. and in accordance with the U.S. Securities and Exchange Commission Rule 15c2-21. In addition, the School Board shall comply with all state and federal laws and regulations regarding debt issuance and management.
Official statements accompanying debt issues, Audit Reports, Comprehensive Annual Financial Reports, and continuous disclosure statements shall meet (at a minimum) the standards articulated by the Government Accounting Standards Board (GASB), the National Federation of Municipal Analysts, the Securities and Exchange Commission (SEC) and generally accepted accounting principles (GAAP). The Superintendent and contract CPA shall be responsible for ongoing disclosure to established national information repositories and for maintaining compliance with disclosure standards promulgated by state and national regulatory bodies.
It shall be the School Board’s policy to establish debt reserves as required by the bond agreement.
| Re-Adopted: October 5, 1999 | Re-Adopted: March 3, 2015 |
| Re-Adopted: March 3, 2009 | Revised: September 4, 2018 |
Ref: La. Rev. Stat. Ann. §§17:89, 17:1371, 18:1281, 18:1282, 18:1283, 18:1284, 18:1293, 39:471, 39:554, 39:562, 39:1410.60, 39:1421, 39:1438
Board minutes, 10-3-78, 10-5-99, 3-3-09, 3-3-15, 9-4-18
East Feliciana Parish School Board