Eric Heringer has worked behind the scenes for decades to bring new schools to fruition across the state, and to educate and advise superintendents, trustees, and taxpayers.
As a managing director for Piper Sandler, a public finance investment bank that dominates the school bond business, Heringer said those buildings will be a lasting part of his legacy.
But perhaps the more important part is less tangible: the knowledge he continually imparts on stakeholders. From school board meetings, to community presentations, to private conversations, Heringer is constantly educating the public on his complex, niche area of expertise.
Here’s his take on the work he does and its impact on public education.
Note: Questions were edited for clarity and length.
What is your history with Idaho and Piper Sandler?
I started my career in public finance in 1998 with a firm called Seattle-Northwest Securities. At the time, I was working exclusively with public schools in Washington. In 2002 I got asked by the company to take over our Boise office following the retirement of our managing director in Idaho. Given my background in school finance, I immediately went to work growing our Idaho school business. I also needed to grow our business with different governmental clients including cities, counties, universities, special purpose districts (fire, library, sewer, etc). I have been focused on financing public infrastructure in Idaho since 2002. Our original company was acquired by Piper Sandler in 2013, but the work has basically remained the same.
Describe the work you do for school districts.
The primary service we provide to a school district is to help them develop and implement a financing plan (typically a bond issue) for a major capital project (school construction). The end product is helping the school access the capital markets (bond market) to secure financing for their project at favorable interest rates. There are plenty of firms around the country with expertise in the bond markets, but our focus on Idaho has set us apart in this market. We know all of the unique state programs that are available to Idaho schools and the granular specifics of school finance and the Idaho property tax system. We also know who to call at the state or county level when we need clarification, direction or data. This local knowledge and focus allows us to develop a financing plan that meets the specific needs of an Idaho school district.
Piper Sandler and Hawley Troxell often work together. Will you describe that relationship?
Every bond financing needs at least two separate skill sets. Legal and financial. Hawley Troxell has bond attorneys that provide the legal advice and opinions that are needed to complete a bond financing. This is a very specialized legal sector that requires expertise in securities law, federal tax law and state specific municipal law. Piper Sandler is a bond underwriter – we are a registered broker-dealer that provides our clients with access to capital markets. We provide financial guidance on financing structures, timing and terms that are specific to what our clients are trying to accomplish. The bond attorney (Hawley Troxell) provides legal guidance, the Underwriter (Piper Sandler) provides the financial guidance.
Having done this type of work for over 25 years, I pretty much know what the bond attorneys are going to say – and they would probably tell you the same about our work. There is a lot of crossover, but we need to “stay in our lanes” as they say for both practical and regulatory purposes.
“Idaho has one of the strictest public debt laws in the country … What that means is that it is extremely hard to get bonds approved in Idaho. You need two ‘yes’ votes to offset one ‘no’ vote.”
How does Idaho compare to other states nationally in terms of school financing? Are there any states that are a model for funding facilities?
Idaho has one of the strictest public debt laws in the country. Our constitution requires a two-thirds supermajority to pass bonds. That is a 66.67% approval requirement. The only other state in the country with this requirement is Kentucky. Most states require somewhere between 50% and 60%. Looking at our neighbors – Utah and Oregon are simple majority (50% plus one vote), Washington is 60%. What that means is that it is extremely hard to get bonds approved in Idaho. You need two “yes” votes to offset one “no” vote.
Other states also provide some direct money for school construction – often referred to as “state match.” Both Oregon and Washington have a state match where if the local district passes a bond, the state provides up-front matching money for the project. I think it is often around 10% but in some cases can be as high as 50%. That means that the local district can ask its voters for a smaller bond which helps minimize the property tax impact.
We have a few programs in Idaho that help with the property tax impact, but that is after the local district passes a bond for the full amount. There is the Bond Levy Equalization Program which provides annual state money to help with the repayment of the bond. There is also the School Bond Guaranty Program which allows schools to get the lowest interest rates possible on their bonds by utilizing the State’s “Aaa” bond rating. Then you have the recently passed House Bill 292 which created a “School Facilities Fund.” That HB 292 fund provides annual state money that will lower the amount of local property taxes to repay bonds or supplemental levies – and for a handful of school districts provides new money for local school improvements. How this new program will help Idaho schools meet their facility needs remains to be seen, but the help with lowering property taxes certainly doesn’t hurt.
Tell me about Piper Sandler’s work financing charter schools, and the difference between charter and traditional school financing.
Charter school financing is a specialty area in the municipal bond market that has been developing over the past 20 years and has really ramped up in Idaho over the past decade. We were being approached by charter schools and their supporters to help find lower cost, more efficient solutions for financing charter schools in Idaho. Many of the administrators I worked with were moving over to charter schools and so they knew me and our firm. It just made sense to work on something new and see if we could make it better.
What is unique about financing a public charter school vs a traditional public school is the source of repayment. Traditional school bonds are repaid with a dedicated property tax levy – which means the school doesn’t have to use the operating money the school receives from the state to repay the bonds. Charter schools, on the other hand, don’t have property tax support so they have to use their state money to pay for facilities. So the bottom line is if we can deliver lower cost financing then more of the school’s revenue can stay in the classroom.
We think that Idaho provides one of the best environments in the country for financing charter schools. There is consistent legislative and philanthropic support for charter schools in Idaho. The J.A. & Kathryn Albertson Family Foundation and Bluum are providing substantial financial and operational support to this sector in Idaho. The Legislature approved a credit enhancement program specifically for charter schools which is extremely beneficial in accessing the bond market at more favorable interest rates. The Idaho Housing & Finance Association is another part of the charter school ecosystem. IHFA serves as the issuer of the bonds providing the infrastructure that the charter school needs to develop and execute a tax-exempt bond sale.
Piper Sandler has worked with Boise State University on a $43.5 million bond project. What does it entail?
In that case we are their municipal adviser. We don’t actually provide the financing, but rather advise Boise State in a fiduciary capacity to make sure they are getting the best interest rates and financial terms when they sell their bonds. As most people in the Treasure Valley know, Boise State’s campus has been expanding over the past 20 years. The university finances those new buildings and facilities with a combination of philanthropy, pay-as-you-go and bonds.
“When our communities pass school bonds it means that we are coming together to invest in the future of our community – both the people (students, teachers, families), and our public buildings.”
If you could ask Idaho legislators to do one thing to ease the path to building new schools or making major upgrades, what would that be and why?
That is easy to answer – I would ask the Legislature to lower the voter threshold to a simple majority – shoot, I would take a 60% approval rate. However, it might be harder to implement – lowering the voter threshold would require a constitutional amendment. The Legislature would need to authorize a statewide vote on the constitution amendment – then the voters would need to approve that. So this one is not entirely in the control of the Legislature. So that means I get another shot at this question, right?
I would ask the Legislature to modernize the required ballot disclosures. They have gotten confusing and difficult to comply with. I think the intent was to provide transparency with how much a bond will cost the individual taxpayer and I think that is a great objective. The problem is that the required formula and language doesn’t always tell the whole story of what the tax impact will be. This issue is further compounded by the School Facilities Fund money from HB 292. How is a school district supposed to factor this property tax relief money into the disclosure? There seem to be different opinions on this. Bottom line for me is that HB 292 is a game-changer and therefore these required ballot disclosures should be reviewed and updated.
Why does your work matter? How does your work impact Idaho students?
I get so happy when a district passes a bond. I remember when we used to get our election results in the newspaper. I would wake up in the morning the day after an election and grab the paper with all kinds of anticipation. Reading about a school district passing a bond meant that all that hard work by the school and its supporters was being rewarded. They were going to get that new school or new roof or upgraded HVAC system or new career-technical facility.
It seems like such an impossible task with the two-thirds supermajority but schools have been able to get it done. Those moments were just a reminder of what it takes to build our community. When our communities pass school bonds it means that we are coming together to invest in the future of our community – both the people (students, teachers, families), and our public buildings.
Most people generally don’t think about who built all of the public infrastructure we use. The roads, the fire stations, the sewer system, the canal systems, the schools. We often just think they have always been there, but the reality is that the community leaders that came before us made those investments. So now when a school district needs to modernize its schools or needs a new school, it is going to be up to the local community to make that happen.
I play a small part in all of this, but it is meaningful to me to have a career that helps my clients invest in the future of their communities. It feels good when I am on vacation with my family – say in Coeur d’Alene – and I can point out the library I helped finance, the fire station and schools I helped finance, even the sewer treatment plant that you don’t notice when you walk along the greenbelt. That is rewarding for sure.
Disclosure: Idaho Education News is funded by grants from the J.A. and Kathryn Albertson Family Foundation.
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