Saugerties school officials have often spoken of their efforts to offer a quality education to students while remaining fiscally responsible. Those efforts were rewarded in late May when the school district’s financial stability earned a bond rating upgrade from Standard and Poor’s from an A to an A+.
Unlike school grades, A+ isn’t the highest rating (S&P’s global ratings go up to AAA), but the upgrade is indicative the district is heading in the right direction. In part, officials said, that’s due to its increase in reserve funds, its low debt, and its handling of its financial affairs.
According to district business administrator Lissa Jilek, the local economy, housing trends and property assessments also factored into the upgrade. “There’s so many things that go into this, and they felt comfortable adjusting the rating upwards,” Jilek said this week.
The upgrade came in the wake of the district’s success in “refunding” a bond issued for a capital construction project in 2006. Similar to refinancing a mortgage, refunding is common with school districts and municipal governments. This refunding will save the school district $142,000 over a five-year period. “What happened was, we are refinancing a bond that matures in five years, we were able to get it for an interest rate of 1.45 percent, and we saved a significant amount of money,” explained Jilek.
A separate bond from the same facilities project was refunded in 2015, saving the district $271,000 over seven years.
“Every two years a school district has a bond rating review, and the district had a full review in 2013, and at that point we were rated A,” Jilek said. The A rating remained even after the bond was refunded in 2015. This time around, however, the district was upgraded. The A+ rating is retroactively attached to the refunded bond from 2015.
“When we went through our review they noticed that we have some sound financial trends, with fund balance and with reserves, and because of that, we were able to attract multiple bond buyers to our sale and garner the best interest rate for the district,” Jilek said.
The A+ rating, which resulted in numerous offers from investors, should also help the district in the future, as its prospects of meeting its financial obligations is considered strong.
“I’m thrilled with the new A+ rating,” superintendent Seth Turner said in a press release. “It’s a testament to the hard work and dedication to fiscal responsibility of our board of education and administrative team.”
The upgrade was also aided by area residents, who overwhelmingly approved a $62.4-million spending plan for the 2017-18 school year at the polls on May 17. Voters also approved the building of a greenhouse on the high-school campus and the establishment of a capital reserve fund for an amount not to exceed $10 million.
“Voters have helped us tremendously by showing support,” Jilek said. “When they review the district’s finances, they also look for support from voters. Knowing that we had positive support on May 16 for not only our budget but also the greenhouse and to establish a capital reserve really went a long way with Standard and Poor’s. We have proven in the past five years that we have positive voter support, and that support keeps growing and growing. That means a lot.”