Transaction Details

Rum River Special Education Cooperative

Municipal

Lead Bookrunner

Collaborating to Build a Regional Solution for Students of All Abilities  

Background
Baird’s Public Finance team played a central role in a bond financing for the Rum River Special Education Cooperative (RRSEC), a Minnesota Joint Powers Entity (the Cooperative) established under Minnesota Statutes to support the social, emotional and academic wellness of students across central Minnesota along the Rum River. A cooperative is defined as an entity involving mutual assistance in working toward a common goal, and RRSEC exemplifies that definition. RRSEC brings together member districts, itinerant staff and special education programs to reach every student, demonstrating the cooperative model of mutual assistance toward a common goal.

Opportunity
Special education has become a vital part of educating today’s students. The desire to integrate and support students of all abilities has brought new energy and inclusivity to schools, but it has also introduced challenges in meeting every student where they are. RRSEC strives to meet that challenge by working hand in hand with parents and member districts, ensuring that each student has the opportunity to reach their fullest potential.

Faced with the need to replace an outdated special education facility in a cost-effective way, RRSEC partnered with Baird to develop a sustainable financial solution that would ensure continued support for students. The goal was to create a modern, purpose-built space that could serve both member and non-member districts efficiently and sustainably.

Solution
Since September 2023, RRSEC engaged in extensive planning with stakeholders, including detailed planning meetings, site visits, and project development and financing discussions to design a long-term plan for a new North facility. This collaborative process reflected years of coordination and thoughtful planning to ensure the project aligns with the Cooperative’s mission and the needs of the communities it serves.

Baird served as sole managing underwriter for RRSEC’s $15,500,000 Certificates of Participation, Series 2025A (the Certificates), which fund the acquisition of land and the construction of a new special education facility in Milaca, Minnesota. The new facility will replace the Cooperative’s existing “Rum River North” building and provide modern, purpose-built spaces for special education services and related programs serving both member and non-member districts.

Implementation
The Cooperative’s membership includes Braham, Isle, Milaca, Mora, Ogilvie, and Princeton public schools, serving a nine-county region across East-Central Minnesota. Rather than pursuing costly renovations of the old facility, RRSEC partnered with Baird to develop a creative financing structure that balanced long-term needs with flexibility for participating districts. The Certificates are supported by a combination of contributions from member districts and service-based revenues from non-member districts, ensuring equitable participation and long-term financial sustainability. This approach provides RRSEC with a flexible structure that meets its facility needs while maintaining affordability and access for the districts it serves.

Results & Impact
The transaction represented a complex, non-rated credit profile supported by annual appropriations from six member school districts, along with revenues from non-member participants. Baird worked with RRSEC for nearly two years—from the initial meeting through closing—to develop a financing structure acceptable to all member districts.

Given the structure and diverse revenue sources, Baird engaged in extensive pre-marketing well in advance of pricing to ensure strong investor understanding of the credit. The banking team fielded numerous questions from investors and provided education throughout the process, ultimately generating significant investor interest and participation from six investors.

The Certificates were structured with three term bonds (2035, 2040, and 2046) to maximize block size and liquidity, increasing appeal among high-yield investors. After the order period, balances remained in the 2035 term bond while the 2046 maturity was oversubscribed. Baird was able to offset an increase in yield in 2035 with a bump in the 2046 maturity, underwriting the Certificates with no change to the total interest cost (TIC) from the initial pricing structure.

Through careful structuring, pre-marketing, and collaboration between banking and sales teams, the issue achieved favorable pricing across all maturities and provided RRSEC with a stable, cost-effective long-term financing solution. The project reflects the power of partnership between Minnesota school districts and Baird’s commitment to helping educational clients achieve lasting results through innovative, disciplined financing strategies. The RRSEC financing highlights Baird’s continued dedication to delivering tailored, innovative solutions and exceptional service—underscoring how collaboration helps schools better serve every student, every day.