Short-term interest rates have been steadily rising, but the Huntington School District still enjoyed a successful sale of $18 million in tax anticipation notes.
The low bidder for the entire issue was TD Securities. Net interest costs are set at .9200. Jefferies LLC, JP Morgan Securities, Inc., Oppenheimer & Co. Inc. and Flushing Bank also submitted bids for all or part of the issue. The district retained New York Municipal Advisors Corp. as its fiscal advisor to oversee the process.
The district annually issues so-called TANs to fund operations while it waits to receive property tax revenues from the town. This year’s TAN sale will result in net interest expenses of $109,480, according to Kathleen Acker, the district’s assistant superintendent for finance and management services.
The district had budgeted $275,000 for TAN interest costs. The higher figure was used during the budget development process last spring because district officials were concerned that a rise in inflation and interest rates could lead to serious fiscal consequences if sufficient funds weren’t allotted.
Successive Huntington School Boards have pursued conservative budgeting practices, including cautious financial projections to protect residents from unexpected tax increases.
“The sale of TANs remains necessary due to the misalignment in timing of expenses and tax collections, which is beyond the district’s control,” Superintendent James W. Polansky said. “TAN rates are up slightly, but are still greatly discounted for Huntington as a result of its low debt and high credit rating. The district has also sold $2 million less in notes than during the previous year, which will result in lower interest costs.”
Mr. Polansky said the savings generated from the TAN sale will be used to hold down next year’s tax rate