Beech Grove Central Schools Building Corporation (School City of Beech Grove)
Efficient Refinancing to Capture Savings and Enhance Financial Flexibility
Background
School City of Beech Grove (the School Corporation) is a public school district located in Marion County, Indiana, serving a diverse student population across its K-12 system, including both in-person and virtual learning platforms.
The School Corporation operates multiple educational facilities and has recently expanded its programming to include the Indiana Digital Learning School, enhancing access and enrollment growth.
Through Beech Grove Schools Building Corporation (the Building Corporation), the School Corporation undertook a refinancing of its outstanding debt to reduce near-term debt service obligations and improve financial flexibility.
Opportunity
The School Corporation evaluated an opportunity to refinance outstanding bonds in order to reduce borrowing costs and improve near-term financial flexibility. The transaction was designed to achieve debt service savings, particularly in the early years, while preserving a strong security structure and supporting a well-executed offering with broad investor demand.
The transaction involved refunding $8,520,000 of outstanding 2016 bonds, with a focus on reducing debt service payments beginning in 2027. Given evolving market conditions and varying demand across maturities, achieving these goals required a thoughtful approach to both structuring and pricing.
Solution
Baird partnered with the School Corporation as sole manager to deliver a refinancing strategy aligned with the district’s financial goals. The $8,000,000 Ad Valorem Property Tax First Mortgage Refunding Bonds, Series 2026. The bonds were structured as lease rental obligations, secured by ad valorem property tax revenues and a first mortgage lien on school facilities, providing a strong and reliable security framework for investors.
The financing carried an A- underlying rating with AA+ programmatic enhancement, positioning the credit to reach a broad and diverse investor base.
Baird worked closely with the School Corporation and the financing team to structure the transaction in a way that aligned with targeted savings goals while optimizing amortization to reduce near-term debt service. Throughout the pricing process, Baird actively monitored investor demand and adjusted spreads where appropriate to balance execution certainty with pricing efficiency.
Final yields ranged from 2.64% in 2026 to 3.08% in 2034, with a smooth progression across the curve reflecting strong investor demand and an orderly execution.
Results & Impact
The financing was successfully executed, achieving the School Corporation’s objectives of reducing debt service and maintaining strong market access. The refinancing resulted in a reduction in debt service payments beginning in 2027, improving the School Corporation’s budget flexibility and supporting its long-term financial planning.
The bonds were well received by the market, with strong investor demand across the yield curve contributing to an efficient and orderly execution. The transaction was ultimately placed with a diverse mix of institutional and retail investors, reinforcing the credit’s broad appeal.
The financing generated total debt service savings of approximately $220,298.47 and net present value savings of 1.54%. The reduction in 2027 budget year debt service is estimated at $188,532.50.