Well, we did it. Tonight, we approved a deal that would place 50 percent of the interest-rate swaps into fixed-rate instruments, and the rest still in swaps. It was, I think, a good compromise, given the current state of the market and the impact on our cash flow.
It was a 7-0 vote.
We had a moment of panic when the final resolution document showed up around 15 minutes before we were to take the vote, but Jeannie Kaplan and I insisted on getting a quick session with our independent financial advisor, who assured us that we were ok.
The good news is that the portion that’s still in swaps can be moved to fixed as the market conditions make it feasible, and we’ll be working on converting these with a “rider” (a call option) that we can refinance from fixed to a lower fixed rate.
The next order of business is to develop a finance and investment policy that reflects the Board’s preference toward little-to-no risk and that leaves nothing, hopefully, open to interpretation. Our problem has been that this sort of protocol has not existed before, and decisions have been made by people who don’t necessarily think a defined benefit pension fund is as sacred as some of the board members do. So…time to eliminate the variables and set things in stone.
All in all, not exactly what I wanted, but the Denver Public Schools is in a much more stable financial footing. Much thanks goes to my two colleagues, Mary Seawell and Jeannie (Pushy Broad) Kaplan, for showing leadership on this issue and bringing the Board together toward a unanimous vote.