Editor’s note: ImpactAlpha has partnered with HIP Investor to highlight upcoming bond issues with social and/or environmental significance. Disclaimer: Nothing in this post or on ImpactAlpha.com shall constitute an offer to sell or solicitation of an offer to buy bonds.

• CUSIP bond identifier: 547694SC4
• Issuer: Lowell Area Schools, Counties of Kent and Ionia, State of Michigan
• Impact entity rated by HIP: Lowell Area Schools, MI
• Muni sector: K-12 Education 
• Closing date: June 18th, 2024
• Bond amount: $32,785,000
• HIP Impact Rating: 70 (“net positive” on a 100-point scale) 
• Opportunity Zones located in the issuing entity: 11 Opportunity Zones, encompassing 39,000 citizens (of 10 million citizens in Michigan)
• Climate Threat Resilience Rating: 76 of 100 = “more climate resilience”
• UN SDG Rating by HIP
  • SDG 4 Quality Education: 65 of 100 
  • SDG 9 Industry, Innovation and Infrastructure: 74 of 100
  • SDG 10 Reduced Inequalities: 64 of 100

Michigan school bond

More funds for modernizing classrooms to improve learning is what many parents want.  

In Michigan, education-focused muni bonds for Lowell Area Schools, in Kent and Ionia counties in Western Michigan, will provide this modernization. In early May 2024, the bond proposal was approved by voters, split into three series totaling $104.1 Million. 

This initial series of $32.7 Million focuses on improvements to Cherry Creek Elementary. Specifically, funding redesigned classrooms and shared spaces that provide innovative learning environments, and address aging infrastructure issues, such as drainage and mechanical systems to ensure a safe and comfortable learning space. A recent study – “Effectiveness and Efficiency of School Capital Investments Across the US” – finds that capital projects generally raise both test scores and property values. This bond is not expected to raise taxes. 

HIP Impact Assessment = “Net positive”

This impactful bond earns a HIP Impact Rating of 70 (on 100 point scale) for Lowell Area Schools, driven by exceptional performance in graduation rates, math and reading proficiency and reducing the occurrences of chronic absenteeism. 

Lowell Area Schools display a graduation rate of 98%, which significantly outperforms the national average of 87%, and the 81% Michigan state average. High graduation rates can continue by enhancing and maintaining effective learning environments from this bond.

Better attendance at Lowell Area Schools shows a chronic absenteeism rate of only 22%, lower than the national average of 30%. 

In 2022, the National Center of Education Statistics (NCES) conducted an analysis of reading and math proficiency for elementary aged students, to analyze the impacts of COVID on learning. This benchmark is often incorporated by states and used to determine proficiency levels across state or local education standards. 

Nationally, student proficiency dropped by 2%, when compared to 2020 – and, for the first time ever, math scores regressed 3%. Despite this, the Lowell Area Schools boosted math and reading proficiency – with a 51% math proficiency, compared to the regressing national average of 35%. In reading proficiency, the district’s students achieved a 64% proficiency rate, compared to the declining national average of 44%. (Note: proficiency does not necessarily correlate with grade level standards, which vary across states and localities.)

For economically disadvantaged students at Lowell schools, reading proficiency is at the 48% level, above the national average for those students at 46%. While math proficiency is 35% for those lower-income students, those from Lowell’s district exceed the national average of 27%. 

HIP Climate Threat Resilience Rating = “More climate resilient”

This bond’s geography has lesser risk factors for climate, and more resilience potential.  Specifically in Kent and Ionia counties, the main weather risks are tornadoes and strong winds but those have not dramatically impacted the local infrastructure in recent years.

Summary = “Net Positive” impact

In summary, the Lowell School District achieves stronger than average academic performance, with better graduation rates, lower absenteeism, and stronger math and reading proficiency results for students – contributing to the district’s net-positive HIP Impact Rating of 70 (of 100). Bond proceeds are expected to benefit all schools in the district and help educational infrastructure to support student performance. 

Amir Khaleghi is Director of Impact Ratings and Analytics at HIP Investor Ratings LLC.

DISCLOSURES: HIP Investor Inc. is a state-registered investment adviser in several jurisdictions, and HIP Investor Ratings LLC is an impact-ratings firm evaluating impact and ESG on 400,000 investment ratings, including 126,000 municipal entities, 267,000 muni-bond issuances, and 14,000 corporates for equities and bonds. HIP Impact Ratings are for your information and education – and are not intended to be investment recommendations. Past performance is not indicative of future results. All investments are risky and could lose value. Please consult your investment professionals to evaluate if any investment is appropriate for you, your goals, and your risk-return-impact profile. This is not an offering of securities.