Transaction Details

Santa Monica-Malibu Unified School District

Municipal

Lead Bookrunner

Delivering Taxpayer Savings Through Dual-Series Financing

Background

Santa Monica–Malibu Unified School District (the District), established in 1875, serves approximately 8,333 students across the cities of Santa Monica and Malibu, as well as unincorporated areas of Los Angeles County. The District operates a comprehensive portfolio of educational facilities, including nine elementary schools, three middle schools, two comprehensive high schools, a continuation high school, a K–8 alternative school, and a project-based learning high school pathway, alongside child development and adult education programs.

On November 13, 2025, Baird’s California K-12 Public Finance group served as senior managing underwriter for two general obligation bond transactions, each rated Aa1/AA+. The financings took place during a period of steady market conditions characterized by balanced tone, unchanged AAA scales, stable MMD, and selective yet constructive long-end investor participation.

Opportunity

The District pursued two complementary financing objectives. First, it sought to reduce taxpayer costs by refunding outstanding general obligation bonds through a forward-delivery structure. To ensure measurable fiscal benefit, the District established minimum refunding thresholds, including achieving at least 5% net present value (NPV) savings for each refunded maturity, a minimum of $2.5 million in aggregate NPV savings, and at least $3.3 million in gross savings.

At the same time, the District aimed to launch the first issuance under the $395 million authorization approved by Malibu voters in November 2024. This initial $130 million issuance for School Facilities Improvement District (SFID) No. 2 was intended to support major modernization and replacement projects across Malibu schools and to begin implementing the long-term capital plan approved by the community.

Prevailing market steadiness, including flat MMD levels, mild Treasury movements, and firm ratio bands created a favorable window to pursue both the refunding and the new-money financing.

Solution & Implementation

$41,510,000 2026 General Obligation Refunding Bonds (Forward Delivery)

Baird structured the refunding as a five-month forward delivery, enabling the District to lock in favorable interest rates ahead of the 2026 call date while minimizing carry cost. The bonds carried maturities from 2031 through 2035, aligning the refinancing with the District’s long-term debt profile. Strong investor participation supported an efficient forward premium of just six basis points per month, reflecting stable market conditions and the District’s Aa1/AA+ credit strength.

The refunding exceeded every savings benchmark established by the District, generating $4,465,000 in gross taxpayer savings, $3,616,197 in net present value (NPV) savings, and a 7.68% NPV savings percentage, all calculated net of financing costs. By securing these results ahead of anticipated market uncertainty entering 2026, the District reinforced its commitment to proactive, cost-effective debt management.

$130,000,000 School Facilities Improvement District No. 2 (SIFD No. 2) (Malibu Schools) General Obligation Bonds Election of 2024, Series A

The inaugural issuance for SFID No. 2 provided long-term financing for modernization and replacement projects across Malibu schools, with maturities extending to 2055. Investor demand was exceptionally strong, with 159 orders totaling more than $375 million, nearly three times the amount offered. This depth of participation supported repricing improvements across the scale and enabled the final term bond, exceeding $50 million, to incorporate selective discounts on approximately $20 million, resulting in nearly 35 basis points of yield savings compared with traditional 5% coupons.

The bonds ultimately priced through a comparable Aa1/AA+ transaction completed by another firm on the same day, underscoring the effectiveness of the District’s credit positioning and Baird’s marketing approach. Compared with the District’s good-faith estimates, the Series A Bonds achieved over 40 basis points lower in interest rate, more than $12 million in reduced debt service, and a 1.89× repayment ratio, delivering substantial long-term value to the Malibu community.

Results & Impact

The dual-series financing strategy delivered substantial benefits to the District and its taxpayers. The refunding exceeded all net present value savings thresholds, producing measurable and immediate taxpayer relief. The new-money issuance successfully launched Malibu’s long-term capital program with strong investor support, favorable pricing, and meaningful cost reductions. Together, the financings demonstrated the District’s commitment to prudent fiscal stewardship, strategic debt management, and effective execution of voter-approved capital programs. District leadership, Los Angeles County, and its Municipal Advisor expressed strong satisfaction with the outcomes, highlighting Baird’s structuring expertise, proactive marketing, and disciplined transaction execution.