Manatee School Board Moves to Secure European Market Bonds Against Default

BRADENTON -- At Tuesday’s meeting, the Manatee School Board voted to approve a plan that would allow the majority of a major investment agreement between the school district and British banking company Barclays to be kept in place, in order to prevent the district from losing more than $7 million accrued from the investment.

The plans, which were discussed at the board workshop prior to the meeting, stem from the district’s 2010 decision to fund a restoration of Manatee High School’s Davis Building, for which the district received $21.6 million (allocated by the Florida DOE) in special interest-free bonds that were authorized by the American Reinvestment and Recovery Act to finance school construction projects.

Following receiving the bonds, the district invested funds with Barclays in Sinking Fund Deposits (authorized by a Forward Delivery Agreement that the two entities entered into in 2010) at a rate that will result in the district’s total repayment amount for the bonds being $14.2 million, more than $7 million less than the $21.6 million originally received. 

The Forward Delivery Agreement that the district entered with Barclays allowed the district to invest the sinking funds over a time period that matches the October 2029 due date of the principal owed for the bonds allocated in 2010. The district invested the sinking funds at a rate that resulted in the district’s total repayment amount being $14.2 million -- more than $7 million less than the 21.6 million originally received.

One stipulation of receiving the bonds was that the receiver spend the $1.6 million in proceeds within three years, which the district did not do. Superintendent Rick Mills advised during the workshop that not spending the proceeds “has brought us here today for this agreement that we need to sign, so that we restructure it, and hence not default.” 

The completion and signing of the Response Form provided by Barclays, as well as the partial termination of the investment agreement, serves to place the school district in compliance with European market regulations (which the district is held subject to due to signing the Forward Delivery Agreement with Barclays), which the board was advised is necessary to prevent termination of the entire agreement by Barclays.

Speaking after the meeting, Board Chair Julie Aranibar said that the reason for discussion of the issue at the workshop prior to the regular meeting vote is that the original approved document authorizing the agreement with Barclays had apparently not been archived in the agenda minutes from that meeting, and wanted other board members to see the information before signing off on it. “If I sign a document as Chair, I obligate this board … the board should have a vote on it first,” she said.