Bond Accountability Commission 2 Recommendations Page 104
Cash Flow Considerations
CMSD issues debt as needed to meet the expenditure requirements of a series of facilities projects organized as Segments 1-10. In meeting the expenditure cash flow requirements, the District’s overall strategy involves retiring principal as rapidly as possible within the Bond retirement millage target. This is done with the intent to facilitate potential rating upgrades, as well as to allow for capacity within the Bond retirement millage rate target at the time the District might bring another Bond issue before voters. A further consideration is to utilize a phased-in debt issuance approach so as to adhere to IRS spend-down regulations. (While we analyze the phased-in issuance approach herein, whether the District is subject to arbitrage rebate is outside the purview of this analysis.) Toward the aforementioned goals, the District has implemented a strategy of issuing Bonds and Notes as necessary to fund authorized building projects. With a 68% State match available, in order to initiate each segment, the District needs to demonstrate that it has funds on hand to cover its 32% share, so that the State will release its portion. Further, the District must address “Locally Funded Initiatives” (“LIFs”) (additional projects not eligible for the State match). (The LIFs do not benefit from a State-funding match.) Therefore, the District needs to provide funding, adequate to cover its share, and in time, both to begin projects and, as applicable, to receive State matching funds. Thus far, the District has issued $280,000,000 of the $335,000,000 Issue 14 authorization via Bond and Note issuances, leaving $55,000,000 to be issued.