Orange, CA – December 9, 2019 – In a strategic financial move, Orange Unified went to market and successfully completed the sale of the new Taxable Retirement Health Benefits Refunding Bonds, Series 2019A (“2019 OPEB”), to help restructure long-term debt and most efficiently utilize fiscal capital.
Orange Unified was able to conduct a competitive bond sale with eight different financial firms submitting bids due to the District’s high credit ratings. In addition to increased desirability to investors, OUSD’s high credit ratings allow for lower interest rates on future debt, saving taxpayers money.
The District sold half of the original 2008 OPEB bonds that carried a variable interest rate and replaced them with 2019 OPEB carrying an average fixed interest rate of 2.67%. Transitioning the bonds to a fixed interest rate smooths out the District’s expected total OPEB debt repayment obligation by mitigating future spikes in the market. The other half of the OPEB bonds were kept at the present variable rate, which is currently very low, to maximize existing savings and allow for the flexibility to refinance in the future.
“The actions and fiscal decisions regarding the District’s long-term debt structure serve to support the ongoing fiscal solvency of Orange Unified,” said Superintendent of Schools Gunn Marie Hansen, Ph.D. “Revising our operating expenses allows for us to maximize the funds we have available to support educational programs for our students.”
Last month, Moody’s Investors Service granted Orange Unified Aa1 issuer ratings. Being granted an Aa1 issuer rating reflects the District’s strong financial position supported by conservative fiscal management and proactive approach to minimize the potential impact to financial flexibility due to projected student enrollment declines. It also indicates that Moody’s anticipates that Orange Unified will maintain a healthy and stable financial position.
The original 2008 OPEB bonds were issued for the purpose of pre-funding the District’s retirement, medical, and other health benefits obligation to eligible and former employees.