Ephrata schools defeasing bonds due to inflation

EPHRATA — The Ephrata School District is moving forward with the process to defease a nearly $28 million bond approved by voters in 2019, said Superintendent Tim Payne in a Monday morning interview. 

“Where we’re at in the process is the board had a hearing,” Payne said. “You have sort of changed the bond away from its intended purpose, (so) you have to go through the same process (as the initial approval) whether you’re defeasing or you’re gonna say, ‘Gosh, we couldn’t build that building now.’”

Payne said the first hearing on the issue occurred during the Nov. 27 Ephrata School Board meeting. The defeasement of the bond measure, wherein bonds are sold to investors, the resulting funds are invested into an escrow account and then used to repay those sold bonds. Generally, Payne said, the process should work out in the district’s — and taxpayers’ — favor by providing about $1 million or more in interest on the escrow account, even after interest on the bonds is paid. The next step in the process is for the detailed investment information to be presented at the next school board meeting for board members’ consideration and approval.

Cory Plager with D.A. Davidson, an accounting firm that works with the district, is looking into investment options for the defeasement process and will present that in December, Payne said. From there, the process is mostly about following any resulting resolution the board may approve in December. Once that’s approved, Plager will get finalized investment rates determined for the district, the process will move into a sell-and-repay situation with the investments and projected interest return helping to offset costs for taxpayers.

Payne said the school will need to move forward with determining how it will take care of the needs the district still has for repairs and upgrades at multiple campuses such as Grant Elementary School. While Columbia Ridge Elementary and Ephrata Middle School were refurbished, campuses such as Grant are still outdated and in need of expansion to meet the student body’s needs, Payne said. The bonds that are being defeased weren’t enough to cover the remaining projects because inflation had increased the overall costs for those projects more than projected when the proposition was put before voters in 2019.

To plan any sort of upcoming bond package, Payne said the district will turn to stakeholders such as parents, community members and experts to evaluate the district’s needs, project costs under current economic conditions and look at what sort of funding will be needed. A bond package may then be developed and put forward in 2026 or 2027 once the district has had time to plan. 

About 35 community members began meeting Monday night and will be participating in additional meetings through around spring break of this school year, Payne said.

“That community portion of it is a diverse cross-section of the community, right, so you’ve got representation of lots of people,” said ESD Public Information Officer Sarah Morford.

The overall process will take time, Payne said.

“Remember that process is a two-year process, so you’ve got to build the background and then move it, going from a 50,000-foot level down,” he said. You’re gonna get right down there in the weeds about what (is recommended) to the board because the board is the one that ultimately decides (whether to move forward with a bond election).”

Right now, Payne is invested in that planning and looking at what needs to happen on a nearer ballot measure — next year’s education programs and operations levy in February which pays for the school district’s general instructional operations.

R. Hans Miller may be reached at editor@columbiabasinherald.com.