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Joel Sutter
Receives MASBO Award
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.
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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.
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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.
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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
President and CEO
sapfelbacher@ehlers-inc.com
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Update on School District Cash Flow and Borrowing
Options
by Joel Sutter, Senior
Financial Advisor
 We 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
 Benchmark 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?
Click here to continue
reading.
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2011
Operating Referendums
 Many 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?
Click here to continue
reading.
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Arbitrage:
Are You Prepared for Federal Examinations?
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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