More Bond Refinancing Can Save Bernards Schools Another $2M

Taking advantage of a further drop in interest rates on almost $26-million worth of bonds that already had been resold in 2004 is likely to save the Bernards Township school district about $2 million if all goes as planned, the school district's bond advisor told the Board of Education.

Bernards School Board Member William Koch said the transaction already had been approved, and no further action was needed by the board on Monday.

Mary Lyons of Phoenix Advisors told the board that a plan to float $25,970,000 worth of bonds from earlier projects, last refunded and refinanced in 2004, could save the school district a net of $1.975 million in interest payments.

Following the discussion with the board, she said that actual savings over a 10-year period would add up to about $2.2 million total toward bond payoffs if projected savings are realized.

Lyons said the bonds currently out on the market are paying an interest rate of 4.46 percent.

The bond advisors would be seeking to sell the outstanding amount in a new series of bonds during the week of Sept. 17, she said. An estimated new interest rate of 2.87 percent is anticipated, Lyons said.

The plan is then to refund the higher-interest bonds, and close on the new bonds in October, she said. The actual interest rate on the new bonds would be set during September, she explained.

Interest rates have been on the rise, but Lyons said she believes the savings still can be achieved by acting during September.

This isn't the first time in the past year or so that the school district has replaced outstanding bond issuances with lower-interest borrowing through selling new bonds.

With regulations setting much of the timing, three piecemeal bond refinancing projects already have been approved in the past two years to sell new bonds to pay for the remaining outstanding balance of a $50-million-plus school construction referendum approved by township voters in 2005.

The final round of the refinancing for the schools construction, brought by Phoenix Advisors before the board last June, was expected to save more than $2 million in bond interest payments, on top of more than $3 million from earlier bond refinancing projects, Lyons said at that time.