June 2011

 

Joel Sutter Receives MASBO Award

Joel Sutter Cake 

Joel Sutter, Senior Financial Advisor at Ehlers, received Minnesota Association of School Business Officials (MASBO) Associate Leaders Award during awards presentations at the 2011 Annual Conference on May 5, 2011 at Breezy Point, MN.

To read more about the award, click here.

 

 

 

 

 

New IRS Questionnaire on Advance Refundings

 

On May 24, the Internal Revenue Service (IRS) announced that it has initiated a new questionnaire for borrowers who have issued tax-exempt advance refunding bonds.  The questionnaire is extensive (8 pages, with 22 multi-part questions). Some of the topics covered include:

  • How the issuer decides to conduct an advance refunding;
  • Advance refunding policies;
  • Review of arbitrage yield restrictions and implementation restrictions;
  • Purchase of state and local government securities (SLGS) or other investments for the advance refunding escrow; and
  • Record keeping.

It will be sent to 300 government entities and other tax-exempt organizations that issued or benefitted from advance refunding bonds between July 1, 2009 and June 30, 2010.

 

Click here to continue reading.

 

 

 

Wellness Challenge

by Alicia Aulwes, Bond

Sale Coordinator  

 

Ehlers recently participated in the "Shape Up" challenge, a National program from Medica designed to kick-off the arrival of Spring  and encourage people to create healthy habits.  It was a 6 week program focused on improving 5 daily habits.

 

One checkmark was given for each area completed areas such as eating 5 fruits/vegetables, sleeping 7 hours, taking 10 minutes to relax, getting 30 minutes of exercise and performing one healthy activity per day for yourself.  

 

Click here to continue reading.

Greetings!

 

Welcome to the latest edition of The Advisor.

 

In this issue, there are two IRS-related articles to which I draw your attention. One article alerts you to a questionnaire going out to a small group of government entities and other tax-exempt organizations, and the other article discusses being prepared for Federal examinations as it relates to Arbitrage. 

 

I'd also like to take this opportunity to congratulate Joel Sutter for receiving the prestigious MASBO Associate Leaders Award. He truly deserves it for exemplifying what it means being a leader in public finance. Congratulations Joel! 

 

Steve Apfelbacher 

Steve Apfelbacher

President and CEO

sapfelbacher@ehlers-inc.com

 

Update on School District Cash Flow and Borrowing Options

by Joel Sutter, Senior Financial Advisor

 

joel sutterWe are currently working with many school districts to analyze their cash flow schedules, explore options to address cash flow shortfalls, and sell anticipation certificates.  Cash flow patterns for fiscal year 2012 will be different from prior years, due to implementation of the property tax shift this spring.  These differing patterns are causing us to explore new cash flow borrowing strategies.

 

Districts are also facing more uncertainty than in other years, due to the lack of agreement on a state budget for the next biennium and the possibility of a state government shutdown.  For now, we are urging districts to estimate their cash flow schedules based on current law, but with an eye to what will need to be done if there are further significant changes.

 

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Benchmark Data for Similar Districts

by Tom Berge , Financial Advisor

Tom BergeBenchmark data is an important tool enabling school administrators to evaluate district operations against a selected group of comparison districts and, as a result, make better management decisions.  But what criteria should be used to select comparison districts? 

 

The initial reaction of most administrators is to select neighboring districts, districts in the same athletic conference, or districts in the same county. However, this may not lead to valid comparisons as the selected districts maybe significantly different from your district - in terms of student demographics, tax base, enrollment, or age of facilities. The question should be: how can we objectively select comparison districts that are truly similar to our district?


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2011 Operating Referendums

byJodie Zesbaugh, Financial Advisor

Jodie ZesbaughMany school districts are considering presenting operating referendums to their voters as part of the upcoming general election on November 8, 2011.  Historical data shows that approval rates are generally higher in odd-numbered years (when there are no statewide elections) and lowest in presidential election years like 2012.

Why are districts increasingly relying on referendums?

 

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Arbitrage: Are You Prepared for Federal Examinations?

by Gail Robertson , Senior Financial Specialist, Arbitrage

Gail Robertson

Any time a school district issues tax-exempt bonds, it must agree to comply with the arbitrage and yield restriction requirements of federal regulations.Failure to comply with the regulations could result in significant financial fines and penalties, and could even cause the IRS to designate the bonds as taxable.

 To comply, the issuer must either 1) remit profits (aka "arbitrage") from investing gross proceeds of the issue at a yield in excess of the bond yield to the Treasury every five years until the debt is no longer outstanding, or 2) satisfy exceptions to the rebate and yield restriction requirements.  The IRS routinely examines debt issuances to ascertain compliance with the arbitrage requirements. Federal agents initiate the examination by sending issuers Form 4564, which contains a series of information document requests. Issuers must submit a response to the IRS within 21 days. 


Click here to continue reading.

 

 

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