Debt Management Program
This procedural directive outlines the parameters for issuing debt and managing the outstanding debt portfolio of the Albuquerque Public Schools. Pursuant to Board of Education policy, this procedural directive also provides guidance to decision makers regarding the purposes for which debt may be issued, types and amounts of permissible debt, timing and method of sale that may be used, and structural features that may be incorporated. Adherence to this debt management program helps to ensure that the Albuquerque Public Schools maintains a sound debt position and that credit quality is protected.
The District’s general debt policy management guidelines provides for the following:
- Full and timely payment of principal and interest on all outstanding debt;
- Debt shall be incurred only for those purposes as provided in the New Mexico State Constitution and state statute and regulation;
- Capital improvements should be developed, approved and financed in accordance with Board and voter approved resolutions and the Capital Master Plan;
- The superintendent, or his/her designee, shall evaluate the impact of debt amounts and debt service requirements of any new proposed debt within the overall context of outstanding debt;
- Principal and interest retirement schedules shall be structured to: (1) meet available cash flow available to service debt, (2) achieve a low borrowing cost for the district, (3) accommodate the debt service payments of existing debt and (4) respond to perceptions of market demand. Level debt service and shorter maturities shall always be encouraged to demonstrate to rating agencies that debt is being managed prudently and retired at a sufficiently rapid pace;
- Debt incurred shall generally be limited to obligations with serial and term maturities but may be sold in other structures if circumstances warrant;
- The average life of the debt incurred should be no greater than the projected average life of the assets being financed;
- The payment of debt for General Obligation Bonds shall be secured by the full faith, credit and taxing power of the Albuquerque Public Schools. The district shall not pledge any district revenues to guarantee indebtedness of others;
- Albuquerque Public Schools may incur debt to purchase property leased to locally-authorized charter schools. Such debt shall be subject to these guidelines.
- The superintendent, or his/her designee, shall select a method of sale that achieves the financial goals of the district. Such sales can be competitive, negotiated or private placement, depending upon the project and market conditions. The recommendation by the district’s financial advisor will be considered in the decision as to the most appropriate sale method. The recommended method of sale for each financing as approved by the chief financial officer shall be subject to superintendent and Board of Education approval.
- The district shall make every attempt to earn and maintain the highest investment grade rating achievable;
- The superintendent, or his/her designee(s), shall maintain good communications with bond rating agencies to ensure complete and clear understanding of the credit worthiness of the district;
- Finance team members and underwriters should be selected in accordance with the Purchasing procedural directive and the Debt Management Program procedural directive developed under the direction of the chief financial officer. The selection should maximize the quality of services received while minimizing the cost to the district. Any additions to the finance team members shall be subject to board approval. Selected underwriters and financial advisors shall adhere to the Municipal Securities Rulemaking Board (“MSRB”) and the Securities and Exchange Commission (“SEC”) rules and regulations;
- Every financial report, bond official statement and Comprehensive Financial Annual Report (“CAFR”) shall follow a policy of full, complete and accurate disclosure of financial conditions and operating results. All reports shall conform to guidelines issued by the Government Finance Officers Association (“GFOA”), Securities and Exchange Commission (“SEC”) and the Internal Revenue Service (IRS) to meet the disclosure needs of rating agencies, underwriters, investors and taxpayers.
- Federal income tax laws generally restrict the ability to earn arbitrage in connection with tax-exempt bonds. Every attempt shall be made to eliminate or minimize negative arbitrage.
The chief financial officer shall be the superintendent’s designee to manage district debt. The chief financial officer shall develop and maintain a debt management program that shall be subject to the approval of the superintendent and reviewed by the Board of Education; and to review and recommend to the superintendent both the finance teams and structuring plans for all capital financings prior to the introduction of such discussion with the Board of Education.
The chief financial officer may employ the assistance of the district’s retained financial advisor and legal counsel in the development and ongoing administration of its debt management responsibilities.
Debt management administration responsibilities include, but are not limited to:
- Develop and maintain comprehensive debt management guidelines in accordance with this procedural directive.
- Annually assess the district’s ability to issue and repay utilizing financial benchmarks specified within this procedural directive.
- Review and evaluate results of debt financing operations including, but not limited to:
- Issuance of long-term and short-term debt obligations,
- Selection of bond type, structure, methods of sale and marketing of bonds, and
- Investor and rating agency communications.
- Review expenditures of bond proceeds and the status of various projects being financed, including the Capital Master Plan for timeliness of spent bond proceeds.
- Review and evaluate services provided by bond counsel, disclosure counsel, tax counsel, financial advisor, underwriters and other service providers in bond transaction for effectiveness and quality of service.
- Review and revise annually, as approved by the superintendent, the Debt Management Program procedural directive based upon the superintendent’s review of operations;
- Develop and maintain Post Issuance Compliance Guidelines that formalize post issuance compliance controls and procedures related to the district’s financial obligations.
- Review and revise annually; as approved by the superintendent, the Post Issuance Compliance Guidelines based upon the chief financial officer’s review of operations and legal requirements;
- Prepare an annual report to Board of Education on the following:
- Results of previous year’s financings;
- Rating agency reports and rating status;
- Bond capacity of the district and relevant comparable financial ratios;
- All bond financings in progress or anticipated for the subsequent fiscal year, and
- Any changes to the Debt Management Program Procedural Directive.
- Develop and maintain the selection criteria for underwriters, prepare and distribute underwriting Request for Proposals (“RFP”) and recommend to the superintendent and Board of Education the underwriting team for all district credits,
- Develop and maintain the selection criteria for financial advisor and other finance team members, act as the Ad-Hoc Committee on all RFPs and recommend to the superintendent and Board of Education the consultant-based finance team for all district credits, pursuant to the district’s purchasing approval process.
As an important step within the annual development of the budget, the CFO shall annually assess the district’s ability to issue and repay its debt. At a minimum, the chief financial officer shall review and evaluate:
- Proposed financing plans in conjunction with the long range financial plan;
- The Capital Master Plan;
- Current financial position and financial policy to assess the district’s ability to issue and repay its debt.
The chief financial officer shall recommend how much new debt the district may authorize
The New Mexico Constitution limits the powers of a district to incur general obligation debt extending beyond the fiscal year. The district can incur such debt for the purpose of erecting, remodeling, making additions to and furnishing school buildings or purchasing or improving school grounds or any combination of these purposes but only after the proposition to create any such debt has been submitted to a vote of the qualified electors of the district, and a majority of those voting on the question vote in favor of creating the debt. The total indebtedness of the district may not exceed six percent (6%) of the assessed valuation of the taxable property within the district as shown by the last preceding general assessment. The district also may create a debt by entering into a lease-purchase arrangement to acquire education technology equipment without submitting the proposition to a vote of the qualified electors of the district, but any such debt is subject to the six percent (6%) debt limitation. The issuance of refunding bonds does not have to be submitted to a vote of the qualified electors of the district.
The district shall assess all financial alternatives for funding capital improvements prior to issuing debt. “Pay-as-you-go” financing shall be considered before issuing any debt. “Pay-as-you go” financing may include:
- voter approved mill levies;
- intergovernmental grants from federal, state and other sources;
- current revenues and fund balances;
- private sector contributions;
- public/private partnerships; or
Once the district has determined that “pay-as-you-go” and intergovernmental or private sector grants are not a feasible financing option, the district may use short-term or long-term debt to finance capital projects.
Short-Term Debt and Interim Financing - Maturity of one (1) year or less
Short-term obligations may be issued to finance projects or portions of projects for which the district ultimately intends to issue long term debt (or where cash is available in a debt service fund and can be “sponged” to retire bonds immediately thereafter); i.e., it shall be used to provide interim financing which shall eventually be refunded with the proceeds of long term obligations.
Short-term obligations may be backed with a legally available tax pledge.
Lines and Letters of Credit
Where their use is judged by the chief financial officer and superintendent to be prudent and advantageous to the district, the district has the power to enter into agreements with commercial banks or other financial entities for purposes of acquiring lines or letters of credit that shall provide the district with access to credit under terms and conditions as specified in such agreements. Any agreements with financial institutions for the acquisition of lines or letters of credit shall be approved by the Board of Education. Lines and letters of credit entered into by the district shall be in support of projects contained in the approved Capital Master Plan or similar plans implemented by the district.
Long Term Debt (Bonds) – Maturity over one (1) year
Long-term general obligation bonds shall be issued to finance significant capital improvements for purposes set forth by voters in bond elections and the Capital Master Plan or similar plans implemented by the district. Long-term debt may be incurred for only those purposes as provided by state statute and regulation.
All district bonds shall be issued in accordance with the following procedures, which have been recommended by the chief financial officer and approved by the superintendent:
Conditions of Sale
Unless otherwise justified, the issuance and sale of all district bonds, notes, loans and other evidences of indebtedness shall be subject to the following conditions:
- Principal and interest on all outstanding debt shall be paid in a full and timely manner;
- Debt shall be incurred only for those purposes as provided by the New Mexico State Constitution and state statute and regulation;
- Capital improvements should be developed, approved and financed in accordance with board and voter approved resolutions and the Capital Master Plan;
- The payment of debt for General Obligation Bonds shall be secured by the full faith, credit and taxing power of the Albuquerque Public Schools. The district shall not pledge any district revenues to guarantee indebtedness of others. Furthermore, the district has no moral obligation to repay bondholders of conduit financings issues under its authority;
- Principal and interest retirement schedules shall be structured to: (1) meet available cash flow available to service debt, (2) achieve a low borrowing cost for the district, (3) accommodate the debt service payments of existing debt and (4) achieve level tax rate. Level debt and shorter maturities shall always be encouraged to demonstrate to rating agencies that debt is being managed prudently and retired at a sufficiently rapid pace;
- Debt incurred shall generally be limited to obligations with serial and term maturities but may be sold in the form of other structures if circumstances warrant;
- The average life of the debt incurred should be no greater than the projected average life of the assets being financed.
Methods of Sale
Debt obligations of the district may be sold by competitive, negotiated sale or private placement methods unless otherwise limited by state law. The selected method of sale shall be the option which is expected to result in the lowest cost and most favorable terms given the financial structure used, market conditions, and prior experience.
New money issuances by the district shall be sold through a competitive bid process or as otherwise permitted under state law as recommended by the chief financial officer and approved by the superintendent.
- Bid Verification
- Interest cost evaluations among proposers shall be computed based on True Interest Cost (TIC). TIC is defined as the rate at which, as of the date of the bonds, discounts semi-annually all future payments of principal and interest on the bonds to the price bid, not including interest accrued to the date of delivery of the bonds.
- Award of Competitive Bids
- District bonds priced by competitive bid shall be sold to the bidder proposing the lowest true interest cost - TIC - to the district, provided the bid conforms to the official notice of sale.
- Method of Accepting Bids
- The district shall accept bids in person or by electronic means with a preference for electronic bids.
- The district shall not accept bids by telephone.
- The district reserves the right to reject bids that are late or include calculation errors.
- Good Faith deposits
- All competitive bids shall provide for a good faith deposit of not less than two percent of the principal amount of the bonds in the form of a wire transfer in cash, financial surety bond, cashier's check, treasurer's check or certified check drawn on, a solvent commercial bank or trust company in the United States. Such good faith deposit must be received by the district prior to Board of Education action to approve the sale to the best bidder in accordance with state law.
- Permissible Discounts and Premiums
- Minimum aggregate bid may not be less than the par value of the bonds being sold.
- The district may permit discount bids and premium bids.
- Term Bonds
- The official Notice of Sale shall be designed to maximize the flexibility of the prospective purchasers and may include term bonds with mandatory sinking fund installments, and other features that may enhance the attractiveness of the offering consistent with the receipt of the lowest true interest cost possible.
- Financial advisors shall not be permitted to bid as a syndicate manager on competitive sales for bonds for which they serve as financial advisors.
- Conditions of Sale
- When certain conditions favorable for a competitive sale do not exist and when a negotiated sale or private placement will provide significant benefits to the district that would not be achieved through a competitive sale, the district may elect to sell its debt obligations through a negotiated sale or private placement basis, upon approval by the Board of Education. Such determination may be made on an issue-by-issue basis, for a series of issues, or for part or all of specific financing program. The Board of Education may provide for the sale of district bonds by negotiation or private placement, the terms and conditions of the sale, including prices, interest rates, credit facilities, underwriting or remarketing fees, and commissions. Examples of such sales include, but are not limited to the following:
- Variable rate demand obligations;
- A debt issue so small or large that the number of potential bidders would be too limited to provide the district with truly competitive bids;
- A debt issue requiring the ability to react quickly to sudden changes in interest rates (e.g., refunding bonds in volatile or favorable market conditions);
- A debt issue requiring intensive marketing efforts to establish investor acceptance (e.g., story bonds or the use of proprietary or innovative financial products); and,
- An issue of debt with specialized distribution requirements (e.g., bonds sold only to New Mexico residents or private placements).
- Negotiation of Terms and Conditions
- The negotiation of terms and conditions shall include, but not be limited to discounts or takedowns and interest rates by maturity, management, structuring, remarketing, liquidity and bond insurance fees. Guidelines shall be based on prevailing terms and conditions in the marketplace for comparable issuers on the date of issuance, including yields from secondary market trading of comparable issuers and previously issued district bonds.
- Selling Groups Permitted
- The book-running senior manager shall discuss with the district and financial advisor the advantages and /or disadvantages of using a selling group. If utilization of a selling group is appropriate to assure the local retail distribution of a negotiated sale of the district’s bonds, the selling group shall include and be limited to only those firms operating retail brokerage operations within the State of New Mexico.
Allocation and Designation of Bonds
The book-running senior manager shall be responsible for ensuring that the overall allocation of bonds meets the district’s goals of: (a) obtaining the best price for the issue and (b) providing firms with allocations that are commensurate with work preformed. The district reserves the right to monitor the order-taking process and to review bond allocations prior to their release.
Following the execution of a bond purchase contract, the book-running senior manager shall:
- Provide for fair allocation of district bonds to underwriters and selling group members, consistent with district’s goals;
- Comply with all Municipal Securities Rulemaking Board on regulations governing orders, priorities and allocations.
- Submit to the district, for approval, a complete and timely account of all orders, allocations, and underwriting activities related to the sale of district bonds under its management
Priority for assigning orders and allocation of bonds
- Member Orders:
- When practical, retail orders, especially those from the State of New Mexico, are to be assigned the highest priority by the book-running senior manager. Net designated institutional orders shall be given second priority. Allocations shall be assigned only to those firms that place orders, which place their firm’s capital at risk. Group net and stock orders shall receive the lowest priority. Member orders received after over subscription shall not be filled unless earlier orders are canceled or bonds otherwise remain unsold.
- Designated Orders:
- Whenever practical the district shall permit the use of designation methods in its negotiated bond sales which provide institutional investors some ability to direct the credit for their orders;
- For syndicates with at least three firms in the management group, designations shall be distributed between a minimum of three firms with no manager receiving more than fifty percent (50%) of the credit.
- Selling Group Orders
- Selling group members may place orders for bonds and receive credit on the basis of the priorities established above;
- Selling group members are ineligible to receive management and structuring fees and shall be compensated only on the basis of the takedown paid on their contingent sales.
- Stock Orders
- Orders placed during the pricing period for which there is no identifiable retail or institutional customer shall only be filled from under-subscribed maturities.
- Group Net Orders
- The sale of an entire issue on a group net basis is to be avoided in order to encourage competitive pricing dynamics during the order period.
The district may choose to privately place debt with a sophisticated investor or with a state or federal agency, New Mexico Finance Authority or New Mexico State Treasurer, if the cost to the district is less than selling bonds in the open market.
At least one business day prior to the day of pricing, the book-running senior manager shall initiate a pre-pricing conference call with the chief financial officer and the underwriting team to discuss the proposed pricing terms, order period, underwriting spreads components, market conditions, priority of orders and allocations and other necessary pricing information.
The book-running senior manager shall provide the district with a final pricing book. The final pricing book shall include, but not necessarily be limited to, the following information; plan of finance, financing schedule; the distribution list; a discussion of market conditions leading up to and during the pricing; the final pricing; comparable issues in the market; any media coverage; rating agency reports; a full set of final computer debt service runs; a list of selling group members; a table or chart identifying orders and allocations; a table or chart identifying management fee and liability; a table or chart identifying takedown and designation by dollars; and a table or chart identifying designations on net designated orders. The final pricing book shall be provided to the district by the day of closing.
In order to minimize interest rate risk the preference of the district is to issue fixed rate debt however if an alternative structure is determined to be preferential the district may adopt the following bond structures subject to the defined constraints described herein:
Variable Rate Bonds
In the case of tax-supported variable rate bonds, the level of variable rate shall not exceed fifteen percent (15%) of the then outstanding tax supported bonds. In considering the amount of unhedged variable rate bonds to be issued, consideration shall be given to the amount of cash balances available to be otherwise invested as reserves and available as a natural interest rate hedge. Periodically, the chief financial officer with assistance from the financial advisor shall analyze each outstanding variable rate issue to determine if the issue should be converted to a fixed rate or otherwise hedged.
Liquidity and Credit Enhancement Facilities
The district may seek to use liquidity or credit enhancement when such enhancement proves to be cost effective or to improve or establish a credit rating. When their use is judged prudent and advantageous to the district, the chief financial officer shall have the authority to enter into agreements with commercial banks or other financial entities for the purposes of acquiring lines or letters of credit, bond insurance or surety policies, etc. Selection of enhancement providers is subject to a competitive bid process developed by the financial advisor and approved by the chief financial officer.
Prerequisite to use:
- The present value of the estimated debt service savings from the use of credit enhancement should be at least equal to or greater than the premium paid by the district to obtain such credit support; and
- Criteria to be used in the appointment of credit provider include:
- An objective evaluation of responses to a request for qualifications;
- The short-term and long-term credit ratings of the institution and the relative trading level of debt support by such credit provider;
- Institution's experience with providing liquidity facilities to municipal bond issuers;
- Competitiveness of fees submitted, interest charged on liquidity draws, maximum legal and administrative fees;
- Ability to agree to district and state legal requirements; and
- Number and amount of liquidity facilities currently outstanding in the market.
The district should consider prepaying or defeasing outstanding bonds when resources are identified and available to reduce its outstanding debt. Bonds will be structured with shortest optional redemption date which does not increase cost.
The district’s bonds may be subject to optional redemptions and early calls, consistent with the objective of paying the lowest possible interest cost. Early calls may permit the district to act upon decreases in interest rates by refinancing bonds for the purpose of realizing debt service savings. The district and its financial advisor will evaluate optional redemption provisions for each issue so the district does not service its debts at unacceptably higher interest raters.
Reserve Requirements & Bond Insurance
In the issuance of bonds the district may find it necessary to fund a reserve fund or acquire bond insurance in order to achieve the lowest possible interest cost. In each instance the district and its financial advisor will determine the appropriate reserve and or insurance option that allows for the lowest achievable interest cost while maintaining the marketability of the district’s bonds.
The district shall consider refunding outstanding bonds in order to:
- Generate interest rate savings
- Restructure principal and/or
- Eliminate burdensome bond covenants
A present value analysis shall be prepared that identifies the economic effects of any refunding proposed. Prominent among these are:
- Time to call date
- Time remaining to call date
- Negative arbitrage per maturity
- Shape of debt service savings
Requires that the refunding escrow may not exceed ninety (90) days; and unless otherwise justified and approved by the chief financial officer and superintendent, a current refunding transaction shall require a present value savings of at least three (3) percent of the principal amount of the refunding debt being issued and shall incorporate all costs of issuance expenses. A maturity by maturity analysis shall be conducted to determine if the three percent (3%) or greater on a maturity by maturity basis threshold is met.
Requires the refunding escrow duration to exceed ninety (90) days. Governmental bonds issued after 1985 may not be advance refunded with tax-exempt bonds more than once. Consequently, the district should carefully weigh the benefits and opportunity costs of such an action; and unless otherwise justified and approved by the chief financial officer an advance refunding transaction shall require an overall total net present value savings of at least the lesser of two percent (2%) of the part amount of refunded bonds or three times the refunding’s total costs of issuance, including underwriter’s discount and credit enhancement, if applicable. A maturity by maturity analysis shall be conducted to include a determination of the negative arbitrage incurred in connection with the escrow established for a particular maturity. To be considered, the negative arbitrage for a particular candidate shall not be greater than the net present value savings generated by that candidate. The chart below illustrates the savings matrix for a fixed rate refunding of existing fixed rate bonds so that each individual bond maturity generates a net present value savings of at least the following:
Bond proceeds will be invested pursuant to the Albuquerque Public Schools Investment policy and procedural directive. If the investment of bond proceeds is not addressed within the District’s Investment Policy or in the absence of a policy the proceeds will be invested in US Treasury or as permitted by state statute and regulation. Investment maturities will coincide with scheduled construction draw downs.
To provide systematic technical advice and support to the district and for the efficient competitive, negotiated or private placement sale of district bonds, the Board of Education shall approve the selection of qualified professionals including financial advisor(s), and underwriters.
Such selection of qualified professionals shall be based on an evaluation of competitive proposals for a combination of advisory and underwriting services, as recommended to the board by the superintendent or his/her designee. In no case may the financial advisor on any district credit serve as an underwriter in compliance with MSRB rules and regulations.
Term of Appointments
Appointments shall be effective for a term of four (4) years from the date of adoption of the superintendent’s recommendation of award by the district board, unless otherwise amended by the district board at the recommendation of or with the concurrence of the Superintendent.
The chief financial officer shall periodically publish a RFP that invites concurrent proposals from individual offerors to provide services in support of each of the district's anticipated projects.
Technical advisory subcommittees are authorized. Ancillary subcommittees may be established to provide the chief financial officer with technical support for his/her assessment of proposals. Overlapping subcommittee memberships are permitted only if a sufficient number of suitable candidates for such subcommittee assignments cannot be timely recruited.
The superintendent shall approve all advisory committee appointments. All actual or potential conflicts of interest of each proposed subcommittee member must be disclosed by such member for the record, prior to submittal of said member's nomination to the chief financial officer so he/she may judge each individual's suitability to participate.
The results of each subcommittee's review, if such is empanelled, shall be reported to the chief financial officer who shall, after considering the subcommittee’s input, forward to the superintendent his/her recommendation for the designated financial advisor and senior book running manager for each available assignment together with a rank ordered listing of the next three finalists. The superintendent may replace the firm ranked first with either the second or third ranked firm on the chief financial officer’s list when formulating his/her recommendation to the Board of Education.
Blackout Periods Imposed
Communication about a RFP or the selection process with members of a financial advisor or underwriting proposal review committee, district employees, or elected officials of the district by any employee or representative of an underwriting team under consideration for selection is explicitly prohibited from the date of publication of such RFP until recommendation of award by the superintendent. Failure to comply with this requirement shall result in the applicant’s disqualification.
In order of priority, criteria to be used in the appointment of qualified financial advisor or underwriters shall include, but are not limited to:
- Demonstrated ability of the firm to structure an issue of debt utilizing the contemplated credit structure(s) efficiently and effectively;
- Experience of assigned personnel;
- Approach to proposed scope of work, including quality and applicability of proposed financing ideas;
- Demonstrated capability to sell bonds to institutional and retail investors, especially to investors located in New Mexico (underwriters only);
- Demonstrated commitment and capacity of the underwriting firm or firms to put its firm's capital at risk, especially as evidenced by having successfully bid on prior competitive sales of district bonds or by having underwritten the district's debt in adverse markets (underwriting firms only);
- Demonstrated secondary market support for debt which the underwriting firm or firms are retained, especially for the specific credit which is to be pledged (underwriting firms only);
- Fees and expenses;
- Weights for the above criteria may vary and shall reflect the unique requirements of the proposed engagement;
- Preference for local and state businesses shall be granted as may be provided under §5-5-1-1 et seq NMSA 1978;
- Other factors. Other factors are defined as those factors that have not been included as technical selection criteria, but are factors that in some instances must be considered in making the final selection. Their nature will not permit a meaningful numerical predetermination of relative significance of impact on the selection decision, and therefore, they are not numerically scored.
Failure to provide complete disclosure for each of the offeror firms to the following questions or misrepresentation shall result in disqualification. The provider must certify that, to the best of its knowledge, the information submitted in response to this section is accurate, complete and not misleading. Other factors include:
Conflicts of Interest
Each offeror shall list all potential conflicts of interest of which the firms have knowledge of which may arise with respect to the representation of the district on this proposal, including, without limitation, any circumstances which would create the appearance of a conflict of interest. Disclosure of potential conflicts of interest shall be made pursuant to the New Mexico Governmental Conduct Act.
Each offeror shall disclose any political contribution, gift or fund-raising, either direct or indirect, valued in excess of $250.00 (singularly or in the aggregate) made by the firms or individuals at the firms to any elected official or person seeking office in the state of New Mexico in the last five (5) years; any current, proposed or past financial or business relationship or arrangement between a firm or any individual at the firm and any District board member, officer or employee of the district; and any other actual or potential conflict which may give rise to a claim of conflict of interest.
Each offeror shall provide acknowledgement that it has complied with all MSRB rule G-37 filings, and shall document specific breaches of the Rule for which sanctions were imposed. The offeror shall only be required to provide any supplementary information requested by the district.
Each offeror shall disclose any judicial or administrative proceedings of public record that have been filed against the firm during the five (5) years preceding the date of the proposal that concerned the offeror participation in a securities transaction.
Each offeror shall list and describe the current disposition or status of any litigation or formal or informal action taken by any state or federal securities commission, the MSRB, or any other regulatory body against the firm (or taken against any individuals now at the firm who will work under this contract) within the last five (5) years.
Each offeror shall disclose employment practices and describe the current disposition or status of any litigation or formal or informal action taken by the Equal Employment Opportunity Commission or any other regulatory body against the firm within the last five (5) years with respect to its employment practices.
It is the district’s requirement to provide primary and secondary disclosure to all its bond investors on a periodic basis as required by the SEC Disclosure Rule 15c2-12 and SEC Antifraud Provision Rule 10b-5 and MSRB Rule G-36 as stated below:
SEC Disclosure Rule 15c2-12 requires that issuers of municipal securities undertake in a written agreement or contract for the benefit of holders of such securities to provide certain annual financial information to various information repositories.
SEC Antifraud Provisions Rule 10b-5 requires that disclosure made by issuers of municipal securities be both accurate and complete in all material respects at the time the disclosure is provided.
MSRB Rule G-17 requires, in the conduct of municipal securities or municipal advisory activities, each broker, dealer, municipal securities dealer, and municipal advisor shall deal fairly with all persons and shall not engage in any deceptive, dishonest or unfair practice.
MSRB Rule G-23 establishes ethical standards and disclosure requirements for brokers, dealers, municipal securities dealers who act as financial advisors to issuers with respect to the issuance of municipal securities. Firms are prohibited from engaging in Underwriting and Remarketing activities with issuers of municipal securities with whom they maintain a financial advisory relationship, as defined by MSRB Rule G-23.
MSRB Rule G-36 requires filing by the broker dealer of the Official Statement within 10 days of the Bond Purchase Agreement execution.
The district acknowledges the responsibilities of the underwriting community and shall assist underwriters in their efforts to comply with SEC Disclosure Rule 15c2-12, SEC Antifraud Rule 10b-5 and MSRB Rule G-36.
Official Statement Filing - Primary Disclosure
The district shall file its official statements with the MSRB’s Electronic Municipal Market Access (“EMMA”) system.
Comprehensive Annual Financial Report
The district shall file its Comprehensive Annual Financial Report and other information that it deems pertinent to the market in a timely manner on EMMA.
Continuing Disclosure Undertaking Requirements – Secondary Disclosure
The district shall publish its annual Continuing Disclosure Undertaking requirements no later than December 31 of each year following the end of its fiscal year on EMMA or as otherwise provided in the District’s Post Issuance Compliance Guidelines.
Securities Disclosure Policies and Practices of the District
In connection with the issuance of certain bonds, notes, and other municipal securities, the district is required to prepare and disseminate certain disclosure information in order to comply with Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, including a requirement for continuing disclosure of annual financial information and notices of certain material events. This policy shall centralize the information dissemination process, establish appropriate controls on disclosure statements made by the district and enable the district and its enterprises to comply with Rule 15c2-12, in order to assure the district's access to the capital markets as a source of funds for necessary and useful public undertakings of the district. This procedure is not intended in any way to limit any person's access to public records or information, nor to infringe upon the normal political process, in particular the right of any elected official of the district to review, discuss, release, comment upon or criticize any information.
The chief financial officer shall be responsible for reviewing and recommending, prior to release to the public, all official statements and disclosure statements relating to municipal securities which the district is the issuer or an obligated person for purposes of Rule 15c2-12.
No official statement relating to any municipal securities which the district is the issuer or an obligated person for purposes of Rule 15c2-12 shall be issued or released to the public until and unless approved in writing by the chief financial officer or superintendent.
No disclosure statement concerning municipal securities which the district is the issuer or an obligated person for purposes of Rule 15c2-12 shall be made, issued or released to the public by any employee, agent or official of the district until and unless such disclosure statement and the release thereof shall be approved in writing by the chief financial officer or superintendent.
No disclosure statement, official statement or undertaking with respect to any municipal securities which the district is the issuer for purposes of Rule 15c2-12 that is issued or released to the public by any employee, agent or official of the district without the express written approval of the chief financial officer or superintendent as required by this policy shall be deemed to be a statement or undertaking by or on behalf of the district.
Unless otherwise required by law, prior to releasing to the public any official statement or disclosure statement intended to be made public, all non-elected employees, agents and officials of the district shall report to and file with the chief financial officer any such proposed disclosure statement, together with such additional information requested by the chief financial officer, including certificates as to the accuracy of such disclosure statement, and each such employee, agent and official of the district shall consult with the chief financial officer concerning such proposed official statement or disclosure statement.
Published Disclosure Statements
All information and documentation requested by the chief financial officer that may be required to support the preparation of a disclosure statement, official statement or undertaking shall be provided by the appropriate district departments, as identified by the chief financial officer, on a timely, complete, and accurate basis.
All disclosure statements, official statements and undertakings shall be compiled by disclosure counsel whom, together with the chief financial officer and other counsel who are parties to the documentation. They shall be afforded, by the originating department, such unobstructed access to documentation and information, as they may deem appropriate.
Rating Agency, Investor and Media Communications
All communications with rating agency personnel, including responses to their periodic questions, shall be managed through and approved by the chief financial officer or superintendent.
In order to ensure uniform market access to information that may be relevant to the valuation of the district's securities, the release of any information, whether in response to an ad hoc question or self-initiated, that may be potentially relied upon by the market to impute the credit worthiness of the district's debt, whether intended for that purpose or not, shall be reviewed by the chief financial officer and disclosure counsel to determine whether or not:
- The information is already in the public domain;
- The information is a disclosure event as defined by the SEC, requiring prompt notification to the MSRB for EMMA filing;
- The information is full, accurate, complete and not misleading; and
- The information complies with the securities disclosure policies and practices with respect to the Board of Education.
Administrative Position: Chief Financial Officer
Department Director: Executive Director of Accounting
Legal Cross Ref.:
Board Policy Cross Ref.: DE – Bonds, Mill Levys and Education Technology Notes
Procedural Directive Cross Ref.:
NSBA/NEPN Classification: DE
Reviewed: June 11, 2014
Adopted: June 18, 2014