Hannibal School Board approves bond; district expects to save more than $3 million

HANNIBAL, Mo.—The Hannibal Board of Education recently approved a bond that will save the Hannibal Public School district more than $3 million.

The resolution was approved at a special meeting on Dec. 14 that authorized the sale of $14,310,000 General Obligation Refunding Bonds to its Municipal Bond Underwriter, L.J. Hart & Company (L.J. Hart) of St. Louis, Missouri. 

In a Jan. 5 press release, the district explained the specifics of the bond.

“The Series 2023 Refunding Bonds have reoffering yields ranging from 3.30% to 3.75% to constitute a new effective rate of 3.54%, compared to an average interest rate of 5.00% for the Series 2019 Bonds being refunded. The Series 2019 Bonds were sold at premiums that produced $1,629,092 of additional funds for the projects. 

“Through this refinancing, the District reduces future interest expense by $3,641,690. This is the result of the improved current municipal bond market as well as the good name of the District in the municipal bond credit market. This $3,641,690 plus the savings of $3,205,445 from previous refundings and prepayments means that the District has saved $6,847,135 of interest expense since 2016 when it began its relationship with L.J. Hart.

“The Series 2023 Refunding Bonds were made available to local financial institutions as part of the marketing procedure. The HNB National Bank, Commerce Bank, and U.S. Bank agreed to purchase a good portion of the Bonds.”

Susan Johnson, superintendent of Hannibal Public Schools, expressed enthusiasm and support for the refunding option selected by the Board of Education. 

“This plan achieves significant savings and allows the District to capture better conditions in the municipal bond market for the benefit of our taxpayers. It also preserves considerable flexibility for the District in the future for building improvements with no-tax rate increase opportunities under consideration for the April 2, 2024 election,” Johnson remarked.

Neil Branham, vice president of L.J. Hart, prepared the refunding proposal and explained how it can fit into the long-range plans of the District. 

He mentioned that the three significant factors making the Series 2023 refunding attractive were the recently improved interest rates, the fact that the Series 2019 Bonds are subject to prepayment at no penalty on March 1, 2024, and the District’s ability to participate in the State of Missouri’s Direct Deposit Program. 

This program makes it possible for the District to receive a “AA+” rating from S&P Global on the refunding bonds and was awarded an “A” Issuer Credit rating which evaluates the overall creditworthiness of the District. 

Branham complimented Johnson for her prompt and thorough preparations to supply the data necessary for the official statement, as well as the Board of Education for their foresight in making the Series 2019 Bonds callable in five years. The Series 2023 Refunding Bonds will also have a five-year call feature of March 1, 2028 at no penalty.

The closing for the Series 2023 Refunding Bond issue occurred on December 27, 2023. Johnson stated that she was pleased efforts were made to accommodate local investors. 

“It is great that our marketing procedures facilitated this local involvement while still receiving attractive interest rates and we appreciate the support of the HNB National Bank, Commerce Bank, and U.S. Bank,” Johnson commented. 

Several board members commended Johnson and L.J. Hart & Company for developing the attractive refunding plan. 

“We are glad to be able to save $3,641,690 of our taxpayers’ money by taking advantage of the recently improved bond market conditions,” stated Blane Mundle, president of the Board of Education.