Debt Refinance to Save Bernards Schools $600K

Refinancing a portion of the school district's debt will reduce the total payment amount by about $600,000 with possibly more savings to come, school officials were told this week. The on Monday voted to already take about $42,000 in debt payments out of next year's school budget.

The district just within the last month closed on an arrangement to refinance about $9.7 million worth of debt at an interest rate of 2.98 percent, school business administrator Nick Markarian later said.

That will shave about $600,000 in interest payments over the remaining 17 or so years on the bonds that were sold at a lower interest rate, after a previous bond issuance was paid off to allow the debt restructuring, Markarian said on Wednesday.

The plan now is to retire and sell about another $10 million worth of debt next year, a move that would be expected to save the district at least $700,000 along with the current savings, for a total debt payment reduction of up to about $1.375 million, Markarian calculated. However, he said that arrangement, and the expected amount of interest savings, will depend on the interest rate next year.

A bond advisory for the school district said at a previous meeting that financial  regulations prevent the entire amount of outstanding bonds from being sold at one time and resold at a lower interest rate.

Markarian said the school district had about $32 million in outstanding debt when the proposal was first looked at earlier this year. He said that debt primarily stems from major construction and upgrades at all of the school's buildings, including a major expansion at , which was approved by voters in 2005. That referendum was for a total of about $54 million, with some of the amount eligible for state assistance.

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