Transaction Details

San Bernardino City Unified School District

Municipal

Lead Bookrunner

Baird’s California K-12 Public Finance group served as sole managing underwriter on the $94,745,000 Certificates of Participation (2025 Financing) (the “COPS”) for San Bernardino City Unified School District (the “District”). The District was formed on July 1, 1964, and is located in an area encompassing approximately 160 square miles in the County, approximately 65 miles east of Los Angeles. The District primarily serves a portion of the City of Highland, the majority of the City of San Bernardino, and some unincorporated areas of the County. The District operates 49 elementary schools, 10 middle schools, a K-8 school, a middle college high school, six comprehensive high schools, an alternative education school, two continuation high schools, a virtual academy, an adult education school, and two special education schools. There are currently 12 District-authorized independent charter schools operating in the District. Enrollment in the District was approximately 44,704 students in fiscal year 2023-24, which is one of the 10 largest public-school districts in the State of California by enrollment.

The COPS were utilized to fund the Project, which consists of the construction and improvement of various school facilities within the District, including school modernization and improvement projects, athletic facilities improvements, safety and energy projects, lighting projects and heating, ventilation and air conditioning replacement.

The COPS were structured over 20 years, achieved an “A” underlying rating from Standard and Poor’s Rating Agency and utilized Assured Guaranty bond insurance and debt service reserve policy. The District also has created an internal repayment plan for the COPS from redevelopment pass-through revenues scheduled to sunset with the final maturity of the issue in 2045.

On the morning of the sale, April 10th, resembled the “relief rallies” we see after capitulation days in the municipal bond market. Dealers marked scales 46-48 bp lower, quickly clearing inventory; investors chased duration, pushing high-grade 5s as much as 55 bp through normal spreads. Yet the fade into the Treasury close, coupled with ETF selling, signals that the bid is opportunistic, not structural.

Overall, April 10th delivered a technical bounce, not a paradigm shift; valuations corrected but remain volatile, and United States economic policy uncertainty still looms moving forward until more clarity is given.

The District was able to capitalize on this temporary market shift. Baird placed the COPS with 46 separate orders and committed to underwriting over $10mm of the issue unsold to complete the transaction at pricing. When compared to other California K-12 school district financings that entered the market that day, the COPS priced through (lower interest rates/yields) a similar rated GO Bond by up to 15 basis points in comparable maturities.