Unapproved Minutes
Utah Charter School Finance Authority
Monday,November 7, 2016 from 3:34pm – 4:40 pm
Treasurer’s Office Large Conference Room, 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 (State Office of Education)
Others Present:
Bruce Williams (Zions Public Finance)
David Robertson (Lewis Young Robertson & Burningham)
Kirt Slaugh (Utah State Treasurer’s Office)
Ryan Bjerlee (Chapman & Cutler)
Jacob Carlton (Ballard Spahr)
Ryan Warburton (Ballard Spahr)
Reed Stringham (Office of the Attorney General)
Jennifer Barrett (Channing Hall)
Heather Shepherd (Channing Hall)
Ralph Turner (Channing Hall)
Brandon Johnson (Farnsworth Johnson)
Meeting called to order by Mr. David Damschen at 3:34p.m.
1. Approval of Minutes
Motion was made by Mr. Phil Dean to approve the minutes of the Authority’s September 16, 2016 meeting. Motion was seconded by Mr. Scott Jones. Minutes were approved unanimously by Mr. Damschen, Mr. Jones and Mr. Dean. None opposed.
2. Resolution 2016-4
Mr. Bruce Williams of Zion’s Public Finance presented a financial review of Channing Hall. Mr. Williams commented that he had done a thorough review of 2014, 2015 and 2016 financials and that to date all of his clarifying questions for Channing Hall had been answered satisfactorily. Mr. Williams commented that that enrollment for Channing Hall had been a concern during the 2014-2015 school year, noting a drop in enrollment that year from 661 to 619 students notwithstanding a large wait list of over 500 students.The drop in enrollment was explained by the opening of two additional charter schools in close proximity to Channing Hall. Enrollment has since returned to previous levels.
Mr. Williams went on to explain that all budget and expenditure assumptions were reasonable and conservative and that based on his financial analysis he would not expect the school to have any cash flow issues that should raise a concern with the Authority. Mr. Williams stated that the school was not requesting credit enhancement at this time. Mr. Williams further noted that debt coverage ratios were reasonable and that the school could be reasonably expected to manage the additional debt.
Mr. Damschen asked about the projected NPV savings for the financing. Mr. Robertson commented on the savings which were noted as significant.
Mr. Damschen asked about the process for selecting an underwriter. Mr. Robertson responded with discussion on the competitive procurement, bids received, and the differences between the bids. Mr. Williams commented on the value that the Financial Advisor brings to a transaction when he/she fosters competition through competitive procurement.
Mr. Williams made note of a continuing disclosure failure of the school in the past. He mentioned that the disclosure failure was discovered and made current, and that the incident had been noted in the offering document. Mr. Robertson explained that the failure point was with Channing Hall’s trustee and dissemination agent, which had failed to file with EMMA information that Channing Hall had provided. Mr. Robertson further explained that policies had been revised by the school’s management to ensure that this could never happen again.Mr. Damschen suggested that the school could look into US Bank’s PIVOT system as an additional tool to help them track their continuing disclosure requirements.
Mr. Williams finalized his analysis, concluding that he believes the school has sufficient cash and assets to service the additional debt and recommended approving the application.
Mr. Ralph Turner (Channing Hall) commented on how the bond proceeds would be used and on operational policies of the school.
Mr. Dean asked about the enrollment drop and why enrollment was not maintained during that period given the substantial waiting list that the school maintains. Ms. Shepard responded that many students were lost when new charter schools opened up in closer proximity to some of their students. Ms. Shepard further noted that the waiting list did help them get their enrollment back up in 2016. Ms. Shepard further confirmed that students on the waiting lists are likely on other waiting lists as well with other charter schools.
Mr. Jones commented on the declining enrollment in charter schools in the area of Channing Hall, noting the concentration of charter schools in that area and commenting on the fact that wait lists can often times be deceiving since at times wait lists don’t materialize in new students when enrollment declines. Ms. Shepard commented that they had good experience with students on the wait list materializing in new enrollees. She further commented on new development of homes in close proximity to Channing Hall’s school facility which she believed wouldhave a positive impact on enrollment.
Mr. Ryan Bjerlee (Chapman and Cutler) summarized the Bond Resolution, noting that the Resolution authorized the sale of up to $10 million in bonds for refunding of old bonds and financing of new facilities for Channing Hall. The resolution calls for an interest rate not to exceed 5.5% and a term to maturity not to exceed 23 years. He further noted that the Tefra Hearing hand been scheduled.
Mr. Dean made a motion to approve Resolution 2016-4 authorizing the sale of non-credit enhanced bonds by Channing Hall. Mr. Jones seconded the motion. Vote was taken and all members of the Authority voted in favor of approval including Mr. Damschen, Mr. Jones, and Mr. Dean.
3. Discussion and Feedback
A short demo of a proposed website of the UCSFA was provided by Mr. Slaugh (Utah State Treasurer’s Office). Discussion was made by the Authority on what types of information should be included in the website and how the information should be organized.
Motion was made by Mr. Dean to Adjourn