Board Hopes to Save Money on Refunded Bonds

In an attempt to take advantage of low interest rates and save taxpayers, the authorized Thursday the refunding of $6,422,000 in school bonds that were taken out in 2004.

To finance various school projects in 2004, the board issued $23.6 million in tax-exempt school bonds at an interest rate of 4.5 percent.  About $6.4 million of the outstanding bonds that reach maturity on or after Feb. 15, 2015, are now refundable at significantly lower rates.

“When we sold those bonds we were so happy with those rates because they were really low,” the district’s bond counsel Lisa Gorab said Thursday during a presentation to the board. “Believe it or not, the rate of those bonds for the same maturity, not extending the maturity, is about 2.9 [percent].

“So rates are really terrifically low,” she continued, “and it’s a great opportunity to sort of refund the debt and have lower bond payments and tax savings.”

If the bonds were sold immediately, Gorab said the district would realize about $250,000 in savings. However, she said by waiting another couple weeks, the district might reap even greater savings.

“Even though the $250,000 meets the state’s benchmark for savings that you’re required to get…I think the savings can do better,” Gorab said. “I think it makes sense to wait in the marketplace. We’re going to start the process to have the bonds sold within the next couple weeks, but I do think it may make sense to wait another week or so.”

By authorizing the sale of its bonds, the board allows action to be taken immediately by the bond counsel when a more opportune time to sell arises, Superintendent Bruce Watson said.

"The bond counsel acts on our behalf. They call us and report, 'We believe the market right now is perfect for you, we’re going to advertise the sale,'" Watson explained. "They automatically release it at that time. Part of that motion is to give them the authority to make that decision."