District Administration - April 2007 - (Page 52)
ADMINISTRATIVE SOFTWARE There is a good chance that several team members assigned to rate your district were not present at the presentation, so it’s reasonable and expected that you provide a polite and comprehensive explanation of how you’re handling the problems they identify. “It all comes down to a cost-benefit analysis. What matters to the district is the difference between how many basis points will the interest rate drop and the cost of the insurance.” —Mary Harris, assistant professor, Cabrini College, Radnor, Pa. Rating Insurance Rating insurance is another area of possible savings. Several fi rms specialize in providing the policies, which will provide the lender full compensation if the district can’t make the bond payments. By shifting the risk of default to the insurer, the district essentially is guaranteed an AAA rating, but the policy cost may not be worth it. “It all comes down to a cost-benefit analysis. What matters to the district is the difference between how many basis points will the interest rate drop and the cost of the insurance,” says Mary Harris, an assistant professor at Cabrini College in Radnor, Pa. who coauthored a study of the bond rating process of nearly 150 school districts. The insurance market fluctuates, just like the interest rate environment does, so don’t assume you will or won’t get insurance until you’ve run all the numbers. “If I can move up one rating, what does that do to my cost?” Smith says. “I’ve seen periods where it was foolish not to buy insurance, because it was so cheap.” In the end, such pragmatism is your greatest ally when entering the bond market. Balance the costs and benefits; even paring down your district’s debt can be a misstep if that debt is necessary now. If you can make the bond rating process work for you, instead of you working for it, you’ll be in great shape. DA Carl Vogel is a freelance writer based in Chicago. The 52 April 2007 District Administration
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Table of Contents for the Digital Edition of District Administration - April 2007
Editor's Letter
Update
Inside the Law
Curriculum Update
District Profile
Administrator Profile
“See You in Court!"
Lost in Translation
Bonding Agents
Certifying AP Courses
Hunting for Talent - Part 2
Buying Power
The Musty Bookshelf
New Products
Leadership
Speaking Out
The Online Edge
Problem/Solution
Calendar of Events
Overheard On The Pulse
District Administration - April 2007
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