The Goodrich Board of Education has OK’d the refinancing of its 2005 bonds, in move that school officials will save the school district more than $2 million.
By a 7-0 vote on Nov. 24 the board OK’d the refinancing based on analysis by the financial advisors at Stauder, Barch & Associates. The vote comes after a resolution was adopted at the Aug. 25 board meeting to pursue refunding of the 2005 bonds. Further analysis by Stauder, Barch has showed the potential for even greater cost avoidance if the 2000 Series B Bonds are refunded as well.
‘We are happy to be in a position to refinance the bonds which may have a potential savings over $2 million to the taxpaying members of our community,? said Michelle Imbrunone, district superintendent.
The estimated cost avoidance due to having to borrow less from the School Bond Loan Fund (SBLF) and then being able to repay the SBLF at a faster pace, is $1,648,837, she added.
The SBLF was established in the State Constitution and implemented by state law so all K?12 school districts such as Goodrich have the option of applying to the state to have their upcoming debt ‘qualified.?
According to the Michigan Department of Education if for any reason, a school does not make principal and interest payments on the bonds, the state is required to lend it the amount of the shortfall. Thus, the state guarantees the qualified debt of a local school district and a district can then borrow under the state’s credit rating. Also, if a school district levies the required maximum mills for debt service, it has the option of borrowing the additional amount needed for annual debt service directly from the state. This interest-bearing loan must be fully repaid after the bonds have matured.
In 2012 all districts participating in the SBLF program were required to recalculate their computed millage rate. If that rate was determined to be insufficient to repay their bonds and loans by the mandatory repayment date, the district would be required to raise its debt millage rate to taxpayers.
‘Stauder, Barch performs the calculation for Goodrich and, to date, the district has not been required to raise its debt millage rate,? said Imbrunone.
Additionally, a presumed lower interest rate on refunding the school district’s bonds is estimated to be $804,285. This brings the total potential cost avoidance of the taxpayers to $2,453,122, added Imbrunone.