OISD bonds enjoy higher rating, lower interest rate than forecast

The Olney Independent School District Board of Trustees learned that $8.35 million in general obligation bonds it issued on Aug. 26 were snapped up by investors at a lower-than-expected interest rate, thanks to lucky market forces and an “A” rating from the Standard & Poors ratings agency.

“We were very pleased with the results of the market this morning,” Robert Spears from Hilltop Securities told the board. “We were very smart about it but we caught a lucky day in the market.”

Voters in May approved the sale of the bonds to build campus storm shelters that will double as classrooms and augment existing shelters.

The district prioritized building shelters after a 2022 tornado ravaged Jacksboro High School and a storm last year in Perryton sideswiped the school “with no whistle and no warning,” Board President Summer Branum said.

The shelters also were at the top of recommendations made in a security audit by Defenbaugh & Associates.

The plan is to build a storm shelter and seven new classrooms at OJHS and a secure corridor between the high school and Career and Technology Education Center, as well as renovations to the elementary school and the existing shelter at the daycare center, OISD Superintendent Dr. Greg Roach said at the time.

Dr. Roach said the district will not raise taxes to repay the bonds OISD will make room in its budget by paying off two bond issues early, he said.

In February, the district’s financial consultants said the plan would obligate the district to the current tax rate of 19 cents per $100 valuation for the next 22 years, he said.

But the district outperformed those forecasts, thanks in part to Dr. Roach’s decision to seek a financial rating for the first time.

“We were expecting the district’s rating to come in at about ‘A-minus’ and it actually came in at an ‘A’,” Mr. Spears said. “I have to tip my hat to Dr. Roach and [OISD Chief Operating Officer] Mr. Orsak. Clearly, the ratings agencies were very happy and very pleased with the strong financial policies and everything you have in place here at the district.”

The higher rating will save the district about $80,000 over the life of the bonds, he said.

In February, the Hilltop consultants projected a 4.6 percent interest rate “that had a little bit of cushion in it based on interest rates at the time,” Mr. Spears said. At the time, the interest rate on a 10-year Treasury security, which municipal bonds often track, was about 4.15 percent.

On Aug. 26, Treasuries closed at approximately 3.81 percent, he said.

The lower interest rate will allow the district to shave two years off the bonds’ maturity date, saving OISD approximately $50,000 per year in interest, Mr. Spears said.

The district will receive the funds on Sept. 24, Mr. Spears said, as he congratulated the board members for excellent planning.

The successful bond sale should allow the district to hold its tax rate at 19 cents per $100 valuation, Dr. Roach said.

“We were very conservative,” Dr. Roach said. “Unless there is a major depression we should not have any problem whatsoever.”

Construction on the project is slated to begin next year, and last approximately two years, school officials said.