District Sees Big Savings from Bond Refinanceby Morgan Jarema
Taxpayers will benefit from a recent bond sale to the tune of approximately $2.5 million.
Just like a homeowner refinancing a mortgage to reduce the interest rate, the district refinanced in August to lock in lower interest rates on a pair of outstanding bonds.
What that means for taxpayers is less money spent on interest.
"It's like we still have the same monthly payment, but we would be able to pay off a 30-year mortgage in 28 years," Superintendent Ethan Ebenstein said.
Added Director of Finance Jeff Malloch: "And if we see a capital need in the near future, that also could increase our capacity to go out and bond for less mills than we would normally have to."
The district sold an $8.9 million bond that includes building and site improvement funds approved by voters in 2011, and a $19.2 million bond that includes prior construction bonds and is rolled into what is called the School Loan Revolving Fund -- a special fund that districts with a certain millage threshold are able to participate in. The district sold the bonds in the capital markets on Aug. 16.
The new interest rate on the first sale is 3.5 percent, and on the second, 2.7 percent. Both dropped in the days it took to finalize the sales, Malloch said. "I think we saw the savings increase by a couple hundred thousand just over a couple days."
Ebenstein said he wants taxpayers to know that "we are watching the markets consistently, trying to maximize savings."
Standard & Poor's Rating Services also affirmed the school district's underlying credit rating of A-, noting the access to jobs in Grand Rapids and Kent County, and good income indicators and strong market value per capita.Submitted on: September 1st 2017