Approved Minutes
Utah Charter School Finance Authority
Monday, November 27, 2017
Office of the State Treasurer, State Capitol Suite 170
Members of the Authority Present:
David Damschen (Utah State Treasurer) (Chair)
Phil Dean (Governor’s Office of Management and Budget)
Scott Jones (Utah State Board of Education)
Others Present:
David Robertson (Lewis Young Robertson and Burningham)
Jennifer Lambert (State Charter School Office)
Jessica Hardy (State Charter School Office)
Brad Taylor (Academica West)
Brian Baker (Zions Public Finance)
Erin Preston (Lear & Lear Law)
Reed Stringham (Office of the Attorney General)
Perri Babalis (Office of the Attorney General)
Eric Hunter (Chapman & Cutler)
Clint Biesinger (Verapath Global)
Jacob Carlton (Gilmore & Bell)
Kirt Slaugh (Office of the Utah State Treasurer)
Stephanie Schmidt (Early Light Academy)
Sydney Young (Early Light Academy)
Nate Robertson (LYRB)
David Robertson (LYRB) (telephonically)
Royce VanTassell (UAPCS)
Meeting called to order by Mr. Damschen at4:08 pm.
1. Resolution 2017-9
Mr. Brian Baker of Zions Public finance presented a financial review of the Early Light Academy application. Mr. Robertson stated that the cash flows savings would be $150,000 to $175,000 per year from the refunding transaction. Mr. Baker noted that the school does not intend to increase enrollment in the near future which means revenues will remain relatively flat in coming years. He further noted that the school received a downgrade in the bond rating from S&P Global in March of 2017 from BB+ to BB which was a result of S&P’s changing criteria for charter school bond ratings rather than a change in financial condition or outlook at Early Light Academy. Mr. Baker also noted, however, that that school meets all of the minimum financial standards including adequate financial ratios that would be expected in order for the Authority to approve the application.
Mr. Carlton, bond counsel, presented the bond resolution. Mr. Carlton noted that the resolution authorizes the school to complete a bond transaction not to exceed $18.5 MM, the proceeds of which will be used to complete an advance refunding of an outstanding 2010 bond series as well as provide new money for facility improvements. The parameters of the resolution require the bonds to be issued at a rate not to exceed 6.5%, a maturity date not to exceed 31 years and sets the date of a TEFRA hearing for the bonds.
Mr. Dean made a motion to approve the bond resolution. Mr. Jones seconded the motion. The motion passed unanimously with Mr. Dean, Mr. Damschen and Mr. Jones all voting in favor.
2. Review and Adopt updated Credit Enhancement Program Standards, changes to the basic financing Application, and an Addendum to the application for schools requesting credit enhancement.
Mr. Damschen led the discussion stating that the Authority had received an email from a member of the State Board of Education as well as a member of a charter school industry association alleging that the revisions to the standards did not allow for adequate public comment prior to them being brought before the Authority for adoption. Mr. Damschen outlined the processes for reviewing the standards highlighting that the process was started on May 22, 2017, with a working group meeting that included the approved municipal advisors, both approved bond counsel firms, as well as representatives from the Authority’s municipal advisor and assistant attorney generals, staff of the State Charter School Office, as well as the Director of the Utah Association of Public Charter Schools. He explained that after a series of meetings with this working group, an initial draft was put out for comment on August 21. After receiving comments from the professionals in the working group, a second draft was distributed on November 15.
Mr. Damschen highlighted that this was the same process that was followed in drafting the original credit enhancement program standards and prior revisions to those standards. He further noted that the standards were posted to the public notice website on November 15 and that no public comment had been received. He discussed that fact that a revision of the standards was authorized by the Authority in a public meeting of the Authority in late April, and that the recording of that meeting and meeting minutes had been duly published on the public notice website. He emphasized that the changes were mostly innocuous, and that the most significant changes were increased scrutiny of compliance with continuing disclosure requirements. He finalized his comments by emphasizing that the Authority was committed to an open process and that in his estimation the Authority had been sufficiently open with the public.
The Authority discussed briefly the process by which the standards had been revised. Mr. Damschen suggested that even after adopting the revisions to the standards if there is any pertinent feedback from the public on additional revisions that should be considered, that the Authority could re-open the revision process and adopt further changes as needed. Mr. Dean asked if there were concerns with the standards, why weren’t any of those raising concerns in attendance at this meeting.
Mr. Jones stated that he felt comfortable with the transparency of the process such that he was ready to vote in favor of adopting the standards rather than delay further. He asked that in conjunction with that vote he would ask that Treasurer Damschen present to the State School Board at a future meeting on the changes and the Credit Enhancement Program Standards generally. Mr. Jones commented that he believed there had been ample opportunity for public comment and reemphasized that if there were further changes that needed to be considered that the Authority was open to making further revisions in the future. Ms. Lambert confirmed that in statute the Authority has full discretion to make the changes to the Credit enhancement program standards without further consultation or advisement to the State School Board.
Mr. Damschen noted that the reason that approval of meeting minutes was not on the agenda is that because after reviewing the minutes earlier that morning he had found some substantive discussion that was missing from the minutes and had asked that these changes be fixed before voting on the minutes.
Mr. Dean motioned to adopt the amendments to the Credit Enhancement Program Standards, basic financing application and adopt a new addendum to the financing application for schools seeking credit enhancement. Mr. Jones seconded the motion and added discussion regarding inviting Treasurer Damschen to an upcoming meeting of the State School Board, so that if there are any significant concerns with standards that there would be an opportunity for the State School Board to express those concerns to the Authority. The motion passed unanimously with Mr. Damschen, Mr. Jones and Mr. Dean all voting in favor.
Mr. Dean made a motion to adjourn the meeting. Mr. Jones seconded the motion. The motion passed unanimously with Mr. Damschen, Mr. Jones and Mr. Dean all voting in favor.
The meeting was adjourned.