Refinanced Bonds Yield Big Savings for Upper Moreland School District

Upper Moreland School District unanimously approved a resolution to refinance the general obligation bonds, Series A 2004. The new bond Series C 2011 will be settled by October 2011. The refinanced bond will give the school district a net saving of $462,000 over 14 years.

“We were saying 'Let’s make the minimum goal $125,000,'” Michael Braun, Upper Moreland School District’s business manager, said. “This refinance well-exceeded my expectations. This is really impressive.”

Brian Remick, Public Finance Management (PFM), said that the new restructuring of the $3.8 million bond reduced the interest rate from  between 3.45 and 4.75 percent to between 1 to 3 percent.

That interest rate will yield a saving of $248,000 in the first year, $186,000 in the second year, and modest savings of up to $2,000 for subsequent years.

Remick credited the board’s fiscal responsibility for maintaining its AA2 credit rating. This credit rating allowed Braun and PFM to pursue lowered interest rates without changing the duration of the bond payment.

“I would like to thank the board for taking fiscal matters very seriously,” Remick said. “The board presented itself very professionally. You kept your house in order.”

Additionally, Remick attributed the market for the change in interest rates.

“This is a good time for municipalities to refinance,” Remick said. “

Braun said that these large bonds usually are taken out for building construction.

“Here is one way we’re trying to help things out,” Vice President Donald Warner added.

Braun assured the board that Remick and he “are already planning for the next one [refinance opportunity].”