KENTUCKY INTERLOCAL SCHOOL TRANSPORTATION ASSOCIATION …
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Transcript KENTUCKY INTERLOCAL SCHOOL TRANSPORTATION ASSOCIATION …
Ross, Sinclaire & Associates, LLC
Kentucky Interlocal School
Transportation Association
(KISTA)
Presented to:
Southeastern States Pupil
Transportation Conference
Background/Overview
•
On May 14, 1988 the worst drunk driving accident in the nation’s history
occurred in Carrolton, Kentucky.
•
A drunk driver hit a bus traveling from an amusement park which killed
24 children, 3 adults and injured 40 others.
•
Following this accident, the Kentucky Department of Education
established one of the highest state safety standards for school buses in
the nation.
•
With the increased safety standards, school districts in Kentucky now
pay approximately $65,000* (on average) for each school bus unit which
are equipped with diesel engines.
(* This does not take into consideration 2007 increased EPA standards)
•
In order to provide a low cost financing tool for school districts to pay
for their school buses, several superintendents joined together to form an
organization known as the Kentucky Interlocal School Transportation
Association or KISTA.
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What is KISTA?
•
A not-for-profit association of fifteen Kentucky school districts
established pursuant to Kentucky Revised Statutes, Sections 65.210
through 65.300 (“Interlocal Cooperation Act”).
•
The Board of Directors for KISTA are school superintendents or their
designees.
•
The Board of Directors serve without pay and establish policies and
procedures of the Association.
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KISTA
NEW BUS PROGRAM
What does the KISTA New Bus
Program Offer?
• Financing mechanism for school districts to purchase new
buses
• Offers tax-exempt rates v. conventional financing rates
• Stream-lined purchasing process (KISTA works closely with
Kentucky Department of Education “KDE”)
• Self-insured Collision Policy offered with each new bus
financed through the KISTA Program
• Annual used bus auction offered to school districts at no cost
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KISTA New Bus Program History
•
Program in existence since 1991
•
Over 1,900 new school buses have been financed using the KISTA
Program totaling more than $116 million
•
130 out of 176 school districts in Kentucky have financed bus
purchases through KISTA
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How does the KISTA New Bus
Program Work?
•
School district adopts formal Resolution to participate in the KISTA
Program
•
School district enters into an Equipment Lease & Security Agreement
with KISTA
•
School district purchases buses in accordance with the KDE Division of
Pupil Transportation’s purchasing procedure based on state-approved
purchasing contract
•
School district receives bus units in accordance with delivery schedule of
vendor
•
School district is responsible for their lease payments based on their
prorata portion of the total equipment costs and costs of issuance
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KISTA New Bus Program
Pay-Back Mechanism
•
KISTA sells 10-year bonds to fund equipment purchases
•
Total amount of bonds determined by participant’s equipment purchases and
costs of issuance
•
School district’s portion of the costs of issuance factored into their lease
payments
•
School district makes lease payments semi-annually each March 1 and
September 1
•
School district’s payments may be off-set by the transportation component of
the SEEK* fund allotment
(*In Kentucky, SEEK is the reimbursement program known as Support Educational Excellence in
Kentucky)
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KISTA New Bus Program Sample
Payment Schedule
Es tim ate d Total Bond Paym ent
P ay ment
D ate
Int erest
Rat e
P rin cip al
P y mt.
0 1-Sep -0 7
0 1-Mar-08
3 .60 %
5 ,18 5
0 1-Sep -0 8
0 1-Mar-09
3 .65 %
5 ,93 3
0 1-Sep -0 9
0 1-Mar-10
3 .70 %
6 ,15 0
0 1-Sep -1 0
0 1-Mar-11
3 .75 %
6 ,37 7
0 1-Sep -1 1
Int erest
P y mt.
Less
A ccru ed
Tot al
P y mt.
2 ,16 1
2 ,16 1
1 ,29 7
6 ,48 2
1 ,20 3
1 ,20 3
1 ,20 3
7 ,13 6
1 ,09 5
1 ,09 5
1 ,09 5
7 ,24 5
9 81
9 81
9 81
7 ,35 8
8 62
8 62
FY
Tot al
8 ,64 3
8 ,34 0
8 ,34 0
8 ,33 9
0 1-Mar-12
0 1-Sep -1 2
3 .80 %
6 ,61 6
8 62
7 36
7 ,47 8
7 36
8 ,33 9
0 1-Mar-13
3 .85 %
6 ,86 8
7 36
7 ,60 4
8 ,34 0
6 04
6 04
6 04
7 ,73 6
4 65
4 65
4 65
7 ,87 5
3 18
3 18
3 18
8 ,02 1
1 64
1 64
8 ,01 1
1 64
8 ,17 5
8 ,33 9
6 7,3 85
1 6,3 13
8 3,6 98
8 3,6 98
0 1-Sep -1 3
0 1-Mar-14
3 .90 %
7 ,13 2
0 1-Sep -1 4
0 1-Mar-15
3 .95 %
7 ,41 0
0 1-Sep -1 5
0 1-Mar-16
4 .00 %
7 ,70 3
0 1-Sep -1 6
0 1-Mar-17
Tot als:
4 .10 %
8 ,33 9
8 ,33 9
8 ,34 0
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KISTA New Bus Program
Sample Sources and Uses of Funds
Any County USA - Sam ple KISTA Bus Schedule
Sources
P ar amou nt o f Bon ds:
A ccru ed Int erest:
Tot al Sou rces of Fun ds :
$ 67 ,38 5 D ated Dat e:
D eli very:
$ 67 ,38 5 D ays A ccru ed :
0 1-Sep -0 6
0 1-Sep -0 6
U ses
D epo sit to A cqu isi ti on Fun d:
D epo sit Accru ed Int erest t o Bo nd Fun d:
D epo sit to Insu ran ce Reserve Fun d :
U nd erw ri ter's D isco un t :
Co st o f Issu an ce:
Co nt in gen cy :
Tot al U ses o f Fu nd s:
Esti mated Average C ost/ Uni t:
Total Uni ts bei ng Pu rchased:
$ 65 ,00 0
$ 1,3 00
$ 65 0
$ 43 3
$2
$ 67 ,38 5
$65,000
1
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KISTA New Bus Program
Document Process
•
Invoices - Once received are submitted to the appointed Paying Agent
Bank for payment
•
Certificates of Origin – Once received are forwarded to the appointed
Bond Counsel and then sent on to the appropriate school district. The
school district then takes the information to the local County Clerk’s
office to file for the Title
•
Bus Unit - Upon receipt, it is recommended that the unit be inspected
prior to accepting delivery to insure the school district is not liable for
damages incurred during transport.
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KISTA New Bus Program
Self-Insurance Policy
•
Automatically built into the Program
•
School district deposits 2% of their participation amount into Insurance
Reserve Fund upon closing (this cost is included in prorata cost of issuance)
•
All claims submitted directly to KISTA (no outside company)
•
Collision ONLY coverage (does not include storm damage)
•
$5,000 deductible per claim
•
Initial 2% deposit rebated back to the participating school district after the
bonds are retired
•
Since 1991, only 17 claims involving accidents have been processed
through KISTA
•
Approximately $93,000 paid out for repairs of damaged units
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Financing vs. Cash Payment
Considerations
•
A school district can manage its cash flow needs better by knowing in
advance the future fiscal year payments required to meet its school bus
debt obligations
•
Typically, newer vehicles have improved:
– Fuel economy
– Safety measures
– On Maintenance needs
•
Purchasing several new school buses of the same make and model year
allows for:
– Interchangeability of replacement parts, such as fuel and oil filters, tires,
brake shoes, etc.
– Mechanic familiarity with maintenance and repair issues
– Less wasted or overstocked inventory
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True Cost of Borrowing
Amount Borrowed
Less Cost of Issuance
Net Deposit
Inflation Rate (NPV rate)
Borrowing Cost
Investment Rate
IRR
Year
0
1
2
3
4
5
6
7
8
9
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Totals:
NPV:
$
$
$
65,000.00
(1,300.00)
63,700.00
2.00%
4.00%
3.45%
4.41%
3.45%
2.00%
Invest monies
that would
Annual Cash
have been
Flow
used to pay
Difference
for Bus
Pay Cash for
Bus
Borrow and
Pay for Bus
-$63,700
$63,700
-$8,014
-$8,014
-$8,014
-$8,014
-$8,014
-$8,014
-$8,014
-$8,014
-$8,014
-$8,014
-$63,700
$2,196
$2,196
$2,196
$2,196
$2,196
$2,196
$2,196
$2,196
$2,196
$65,896
$0
-$5,817
-$5,817
-$5,817
-$5,817
-$5,817
-$5,817
-$5,817
-$5,817
-$5,817
$57,883
-$63,700
-$16,439
($8,123.18)
$21,964
$8,123.18
$5,525
$0.00
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KISTA
USED SCHOOL BUS
AUCTION
KISTA Annual Used School Bus
Sealed Bid Auction
•
Ross, Sinclaire & Associates, LLC (“RSA”) acts as Financial Advisor to
KISTA and solicits Kentucky school districts for participation in the annual
used school bus sealed bid auction
•
School district participation is voluntary
•
Schools provide detailed lists of used bus inventory for sale in the auction
•
RSA distributes bid packages to potential bidders
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History of KISTA Used Bus Sale
•
RSA began hosting the auction in 1992
•
RSA has sold more than 2,800 buses for school districts state-wide
•
The sale averages 200-250 buses for sale each year
•
Bus prices range from $100 to $10,000
•
Solicitations are mailed to over 75 potential bidders nation-wide
representing:
– Small, non-profit organizations
– Large, world-wide distributors
– Local vendors
– Repair facilities
– Individuals
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How does the Used Bus
Bid Process Work?
• RSA receives sealed bids from potential bidders on the appointed
date and hour
• RSA evaluates each bid received to ensure bidding eligibility
• RSA electronically calculates each bid and determines the best bid
for EACH school bus
• RSA is prepared to award winning bids within 48 hours of the bid
opening
• Winning bidders are notified and school districts are given two
weeks to accept or reject bids received
• Winning bidders are responsible for payment of buses directly to
school districts (no middle man)
• Winning bidders are given approximately one month from
acceptance of bid to take possession of bus/buses
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What are the Benefits to the School
Districts Who Participate?
• Absolutely no cost to participate
• No hassle of holding local public auctions
• No hassle of soliciting public/private bids
• Eliminates costs of advertising, mailing, etc. to solicit bids
• Higher bids received due to more competition between bidders
• Overall greater chance of eliminating used bus inventory
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Can a Financing Program Similar to
KISTA Work in Your State?
•
Legal and Financing Issues
– Does your state permit one governmental unit to act in concert with another
governmental unit in order to provide financing for public projects
(approximately 45 states have supporting legislation)?
– What legal structure will allow for the debt obligations to be ratable?
•
•
•
•
General obligation debt vs. revenue debt
State intercept, global ratings for all public school districts
Mixed credit issues
State and local approvals
– Negotiated vs. competitive bids
– Players
• Bond counsel
• Financial Advisor
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Can Other Equipment Purchases be
Financed under a KISTA Type
Program?
•
Virtually any equipment, included any type of vehicle, computers and
technology related equipment, virtual libraries, etc.
•
Kentucky is currently planning on financing $25 million of White Board
systems for public school systems, using a mix of New Markets Tax Credit
funds, tax free financings and state funds.
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For More Information….
Please contact:
Ross, Sinclaire & Associates, LLC
P.O. Box 398
400 Democrat Drive
Frankfort, Kentucky 40601
800-255-0795
www.rsamuni.com
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