.

Bernards Schools Will Save $2.5M by Refinancing

Updated: Refinancing of 2004 bonds will save school district almost $168,000 per year, school board member says.

With interest rates inching up, the Bernards Township school district didn't quite save the $2.7 million expected for a refinancing program for the remainder of outstanding bonds from the last school construction referendum — but the figure was close.

School Board member William Koch reported that the arrangement made for the refinancing of the bonds will save the district an average of almost $168,000 per year, for a total of $2.5 million in lower interest payments. The district had expected to save about $185,000 per year.

Koch said last month this latest round of refinancing was for more than $24 million worth of bonds due to be paid off in 2030. However, he added on Tuesday that the bulk of the bonds will be retired between 2023 and 2027.

The net interest cost of bonds sold was a slight fraction under 2.8 percent, Koch said on Tuesday. During the refinancing process, the district learned it has a double A bond rating, Koch said at last week's school board meeting.

That savings would be on top of about another $797,000 that the school district had saved by refinancing another $8.4 million during 2012, Rod McLaughlin, business administrator for the school distict, said in January. The bonds being refinanced cover the school district's share of a $51 million schools construction project in 2005, according to figures from school officials.

This latest round, with $24,385,000 worth of bonds, covers the remainder of the school district's outstanding debt from that project, Lisa Gorab, bond counsel for the Bernards Township school district, told the Board of Education in January.

Gorab said that the bond market had been even more favorable in November, the last time the refinancing was discussed with school officials.

The Board of Education had approved the refinancing of the entire amount of outstanding bonds in 2012. But school officials were not able to refinance all of the bonds in 2012.

"Since the first round was under $10 million it qualified for certain tax advantages to its purchasers and the seller [and] the Board of Education got a lower interest rate in return," McLaughlin explained. He said to receive that benefit, the board had to agree not to refund more than $10 million in the year that bonds were sold or issued under that provision.

HG February 19, 2013 at 02:39 PM
What interest rate are they paying?
Linda Sadlouskos (Editor) February 19, 2013 at 07:09 PM
Net rate on bonds sold just under 2.8 percent.
b flake February 19, 2013 at 10:24 PM
How about taking that interest "savings" and paying down the debt faster than required? At the end of the day the "savings" would be even greater.
HG February 20, 2013 at 06:32 PM
Linda, thanks for the answer. 2.8% seems a bit high. I'd expect that for AA municipal bonds with a 20 year maturity rather than a 10-15 year maturity. http://finance.yahoo.com/bonds/composite_bond_rates
doug wicks February 23, 2013 at 03:53 PM
diid we ever receive the 14 million from the state that was promised if we passed the vote ?
Parag Dhagat February 23, 2013 at 04:16 PM
Hey Mr. Wicks.....you used to regularly attend the BOE meetings before! I know you are getting up there:):)!!....but you should start coming once more!!! you are a neighborhood voice that cares and so you ought to be there to help right any course-changes!! what happened to the live TV-streaming of BOE meetings that was planned to begin early this year!!? Has it started!!?
doug wicks February 23, 2013 at 04:41 PM
.it should be easy to livestream the meetings with a simple wi fi camera as there is wi fi at the school -me thinks they don't want to do it

Boards

More »
Got a question? Something on your mind? Talk to your community, directly.
Note Article
Just a short thought to get the word out quickly about anything in your neighborhood.
Share something with your neighbors.What's on your mind?What's on your mind?Make an announcement, speak your mind, or sell somethingPost something
See more »