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Missouri treasurer will not approve bond deals for school districts unless they drop COVID precautions

Missouri state Rep. Scott Fitzpatrick speaks to reporters after being appointed as the next state treasurer by Gov. Mike Parson during an event Wednesday, Dec. 19, 2018, in the governor's office of the Missouri Capitol in Jefferson City, Missouri.
David A. Lieb
Missouri state Rep. Scott Fitzpatrick speaks to reporters after being appointed as the next state treasurer by Gov. Mike Parson during an event Wednesday, Dec. 19, 2018, in the governor's office of the Missouri Capitol in Jefferson City, Missouri.

Missouri Treasurer Scott Fitzpatrick says he will not sign off on money-saving bond deals with school districts unless they drop their COVID-19 health precautions.

The warning comes after Missouri Attorney General Eric Schmitt sent letters on Dec. 7 to health authorities and school districts across the state, informing them that enforcing mask mandates and quarantine orders violated a ruling by Cole County Circuit Judge Daniel R. Green last month.

The judge ruled that public health orders issued by local health departments violate the state’s Constitution.

Now, some school districts have been told that their bond deals will be held up unless their superintendents sign documentation certifying that they are compliant with Schmitt's directive.

Two school superintendents said they were surprised to receive notice of the new conditions on Monday, just days before their bond deals were set to close.

“I didn't want any hiccups in the process and so I just went ahead and signed it and sent it back,” said Gregg Klinginsmith, superintendent of the Warren School District located west of St. Louis.

Through the Missouri Health and Educational Facilities Authority (MHEFA), school districts can enter agreements to refinance their loans at lower interest rates. The state treasurer normally signs off on those agreements, but he’s now requiring that school districts sign a compliance document first.

Mary Compton, a spokeswoman for the treasurer’s office, said in an email that participating in the bond program is voluntary for school districts and that the treasurer has the discretion to approve them.

“Due diligence is always done in preparation for a financial transaction and the disclosure of pending or threatened investigations or litigation is a material consideration when making the determination whether to engage in a financial transaction with any party," Compton said.

Fitzpatrick doubled down in an interview with Missourinet on Wednesday that the changes to the agreements were made out of concern that school districts that defy Schmitt’s order will face legal action.

“We felt a responsibility that if we’re going to enter a finance agreement with the school district to ensure that they are compliant with it, because it gives me concern to enter a financing agreement with the school district that may be subject to litigation from the state and enforcement action from the state,” Fitzpatrick told Missourinet.

The Lone Jack, Hannibal and North Platte County school districts also received notices that they need to sign compliance documents ahead of their bond deals closing.

Klinginsmith said the Warren School District is able to save $768,857 by refinancing. The North Platte County School District would save around $980,000, according to superintendent Karl Matt.

Matt said the funds allow his district to make renovations and pay off building projects, including a new middle school built in 2018 and repairing roofs, more quickly and without raising costs for taxpayers.

“It just makes it longer before we can do those repairs if we were not to sign off on that, if that was a really legitimate legal thing that he can do,” Matt said.

Fitzpatrick told Missourinet that he had spoken to the attorney general’s office and his office’s general counsel to ensure that he had the legal authority — and discretion — to issue his directive.

Both Klinginsmith and Matt said they signed off on the compliance documents, ensuring that their bond deals would go through. Klinginsmith said Warren School District was already compliant with Schmitt’s letter, while Matt said the North Platte School District’s board was expected to change its COVID safety plan on Thursday.

“Luckily, we were in a position that didn't impact us, but a district that was not in compliance, I could see where it definitely (could) be problematic for them,” Klinginsmith said.

Matt said that while he didn’t receive any direct pressure from the treasurer or attorney general, there was pressure to sign it or else not be able to go forward with the refinancing.

Fitzpatrick is seeking to become the next Missouri auditor. Schmitt is vying for the Republican nomination for the U.S. Senate seat being vacated by retiring Sen. Roy Blunt, also a Republican.

According to the treasurer's office, six school districts were asked to sign the certification. Of those six, four signed off and two certifications remain pending or unsigned. 

Some schools in the Kansas City area have already opted to ease up their COVID protocols following Green's November decision.

The Smithville and Kearney school districts voted Monday to drop their mask and quarantine requirements. In contrast, lawyers for the Lee’s Summit School District said in a letter to Schmitt last week that it won’t be backing down in the face of his threats to sue the district.

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