DALLAS -- In a year of record volume for Texas schools, the Irving Independent School District this week made some history of its own by selling the state's first variable-rate deal by a school.

Rauscher Pierce Refsnes Inc. of Dallas priced the $15 million deal late Monday as the market reacted to news that hard liners had thrown Soviet President Mikhail Gorbachev out of power. The initial five-day put was priced at 4.8%.

"It was a horrible day to price that deal," said Dale Henderson, senior vice president at Rauscher Pierce, which is financial adviser to the district and underwriter of the bonds. "We expect in five days that rate will drop to 4.25%."

Despite the initial turbulence, Mr. Henderson said the structure of the deal gives the district flexibility for the $15 million -- which is part of $60 million of warehoused bond proceeds -- for anticipated capital needs.

Larger Texas schools with unused authorization have warehoused millions of dollars of fixed-rate debt because an ongoing legal dispute over the state's school finance law makes it uncertain of when they will again be able to sell bonds.

Texas schools have sold 160 issues totaling $1.69 billion so far this year, according to Securities Data Co./Bond Buyer.

"Most districts doing any warehousing of money at a fixed rate are stuck," he said. "With a variable-rate structure, you can collapse it at virtually any date."

Later, he added, Irving officials "are confident that they are going to need the money, but if the assumptions don't work out, they have flexibility."

While used by other issuers in Texas, the variable-rate structure is new to schools.

"School districts have a more limited ability to do exotic transactions than, say, home rule cities," said Assistant Texas Attorney General Jim Thomassen, chief of the state's public finance section. "For a smaller district, it would be tougher to do .... I don't think you are going to see too many of these."

Mr. Henderson agreed, saying districts with $50 million to $100 million of outstanding debt could benefit most from the variable-rate structure.

Ben Brooks, a partner at Hutchison, Boyle, Brooks & Fisher of Dallas, the bond counsel for the deal, said state law does not allow schools to enter the reimbursement-style agreements that make a variable-rate deal work.

But that was taken care of by entering a standby bond purchase agreement with Dai-Ichi Kangyo Bank Ltd., in which the giant Japanese industrial bank provides a liquidity facility.

"It accomplishes exactly the same [end] as a letter of credit, which cannot be done," Mr. Henderson said.

Mr. Thomassen, whose office had to approve the issue, said an early problem was how to determine a tax rate when the interest rate will fluctuate. "It's difficult to come up with a tax rate when you don't know that the interest rate will be," he said.

The answer: Design maturities that allow for $500,000 a year in principal to be retired beginning in 1994. Under the structure, lower interest rates allow for more of the debt to be retired, while higher rates will have the opposite affect.

"You have to make sure of all the contingencies," Mr. Brooks said.

The bonds are rated triple-A because they are backed by the Texas Permanent School Fund. They are also are the third series sold this year by Irving, which has a stand-alone double-A rating.

Voters approved the bonds as part of a $77 million authorization in a March 9 election, which came before the state's new wealth-sharing school finance law took effect in April.

As a result, the bonds will be grandfathered from the new law, which will transfer an estimated $400 million of tax wealth from property-rich to poor schools.

The variable-rate financing is largely unused in Texas, where most deals are plain vanilla. But Mr. Henderson said long-term issues are not always the best option.

"There is another risk present in fixed-rate financings, and that is the risk of paying too much," he said. "Fixed-rate is not always the safest."

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