Tax and Aid Anticipation Certificates
Minnesota School Districts - 2012
Fiscal year 2013 will be another challenging year for Minnesota school districts to manage their cash flow. Although the percentage of aid entitlements paid in fiscal year 2012 was recently adjusted upward from 60% to 64.3%, cash balances for many districts will still be lower in FY 13 than in previous years. Many districts will experience cash flow deficits and the best solution to these challenges may be to issue Aid Anticipation Certificates.
Ehlers assists many districts annually with the issuance of Tax and Aid Anticipation Certificates to meet cash flow needs. Some of the key features of Aid Anticipation Certificates issued through Ehlers are summarized below.
- Low Interest Costs. For certificates issued this past year, most districts are paying interest rates of well under 1%. Based on current market conditions, we expect similar low rates this year.
- Flexible Sale Procedures Ensuring Lowest Costs. For most districts, we will recommend soliciting competitive proposals from many underwriting firms, increasing the chances that you get the best possible terms on the day of sale. However, for districts borrowing relatively small amounts, we have developed a new streamlined process that will result in lower up-front expenses and, in many cases, lower total borrowing costs.
- Flexible Schedules and Terms. Because we schedule and sell each district’s certificates individually (rather than pooling them together), we can tailor the schedule and the terms of borrowing to your needs. Many districts will experience cash flow deficits for only a few months. For these districts, it may be financially preferable to issue certificates for a shorter term – covering only the period of deficits – resulting in substantially lower borrowing costs.
- Individualized Consultation and Advice. Issuing Aid Anticipation Certificates may affect other financial issues in your district. For example, it could affect arbitrage rebate exceptions and bank qualification for other forms of borrowing. When you call us to discuss the issuance of certificates, we will discuss other financial issues and, if necessary, alter your plans to maximize the benefit to the district.
- A Smooth and “Low Hassle” Process. The procedures and restrictions associated with issuing certificates can be very cumbersome. But our experienced staff will “walk you through” every step of the process, ensuring that you meet all deadlines and requirements.
For 2012, Ehlers is again offering an optional service. We will prepare a monthly cash flow schedule for you, after requesting key information from you. There will be an additional fee for this service.
For more information on issuing Aid Anticipation Certifications, please click on the following links:
Contact anyone from the Ehlers Education Team at 800-552-1171 or 651-697-8500 or directly at:
Greg Crowe 651-697-8522 gcrowe@ehlers-inc.com
Carolyn Drude 651-697-8511 cdrude@ehlers-inc.com
Betsy Knoche 651-697-8537 bknoche@ehlers-inc.com
Gary Olsen 651-697-8513 golsen@ehlers-inc.com
Joel Sutter 651-697-8514 jsutter@ehlers-inc.com
Jeff Seeley 651-697-8585 jseeley@ehlers-inc.com
Jodie Zesbaugh 651-697-8526 jzesbaugh@ehlers-inc.com
Tom Berge 651-697-8570 tberge@ehlers-inc.com
