Board Attorney: Extra Aid Can't Be Used to Pre-pay Debt

A few township residents’ hope to use the for debt relief was scuttled at the Barnegat Board of Education meeting last night, but the news that the aid couldn’t be used to pre-pay principal on bonds came with a silver lining: The schools’ debt service payments will be level for the next 20 years, according to officials.

William Mayer, an attorney with the district’s bond firm, DeCotiis, FitzPatrick & Cole, LLP, attended the meeting to address the concerns of residents who were circulating a petition calling on the board to use the extra $467,533 to help avoid future debt payments.

“It’s not a bad idea,” Mayer said. “It’s a healthy idea.” It’s the same thrifty impulse that drives people to pay down their credit card debt in flush times.

But when it comes to bonds, he said, it’s not that simple.

The district has three outstanding bonds, Mayer said, two dating to 2004 and one dating to 2007. But, he said, as with many bonds, there are restrictions on how soon the district can start paying them off. That’s because at the outset, investors want to know they’ll be able to collect a certain amount of interest, he said.

“None of them are subject to prepayment earlier than 10 years,” he said, and moving the call date – that is, making a payment early – would get the district slapped with a big fee.

But residents shouldn’t be worried about looming increases in the district’s debt service payments, said board administrator Dean Allison.

“There’s been a misconception that debt service is going to skyrocket,” he said, but obligation is actually going to be a steady 2.8 million until 2032.

“It’s absolutely flat across those 20 years,” he said.

Resident Jake Taylor said that regardless, he wants to see the district come up with a plan for the extra aid. Otherwise, he said, there will likely be some kind of emergency that will absorb the money before it can be set aside to lower costs.

“When money lays where you can readily get a hold of it, that’s what happens,” he said. “I’d like the board to come to the public and say, ‘Here’s what we’re going to do.’”

And the focus should be on tax relief, he said.

“Taxes in Barnegat are ridiculously high. We all have to suffer through that. And this money could help.” It might lead to only a small reduction in residents’ tax bills, “but it does help,” said Taylor.

An interesting resource for exploring bonds:

Mayer told residents after the meeting how they can get details on the bonds entered into by local school districts and municipalities via the Internet, thanks to the Municipal Securities Rulemaking Board's onine public record collection, called the Electronic Municipal Market Access, or EMMA.

Go to emma.msrb.org, and in the green search field, enter the name or special code, called the CUSIP number, of the municipality or entity you're looking for. The Barnegat Township School District's CUSIP number is 067770. The search will call up official statements, continuing disclosures and trade price information bonds and notes.