Good Financial News From USD234

USD234 has some great news.

The board of education recently approved a bond refinance, according to Gina Shelton,  business manager for the school district.

“This saves our community $5,792,515.15 and allows us to pay the bond off 5 years earlier,” she said. “We continue our commitment to be good stewards with our taxpayer funds and are so very excited to have this opportunity.”

In a 7-0 vote, USD 234 School Board approved Resolution 19-09 on March 2, 2020, to refinance a portion of the District’s outstanding Series 2014 General Obligation Bonds to take advantage of lower interest rates and captured savings for our community of $5,792,515.15. As a result of the refinancing, the District will pay off the bonds five years earlier than originally planned.

Series 2020 Taxable General Obligation Refunding Bonds Highlights

  1. The current average interest rate on the Series 2014 bonds is 4.33%.

  1. The final average interest rate after refinancing is 2.57%.

  1. Total savings is $5,792,515.15 (after all refinancing expenses).

  1. As a result of the refinancing, the District will pay off the bonds five years earlier than originally planned, with a final maturity in 2035, versus 2040.

  1. The refinancing improves the District’s financial position, provides interest cost savings and future mill levy management options.

  1. Timing – Why is this important??

    1. Past

      1. School District and Community passage of bond was just in time.

      2. The initial bonds were passed on December 22, 2014.

      3. Legislation became effective July 1, 2015, that lowered the bond state aid.

      4. We are currently receiving 64% in state aid.

      5. Had we waited, our community would have been receiving 33% state aid.

      6. In 2019-20, the state aid is paying all the interest on the school district’s bonds and some of the principal of the bonds.

    2. Now

      1. Interest rates are at a historical low.

      2. The school board’s goal with refinancing was the capture the lower interest rate currently in the market.

      3. History has shown us that interest rates will go back up, so it is critical to take advantage of the lower rates now.

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