RochesterAugust 22, 2012
RCS refunds bonds, saving $2.9 million
By Mary Beth Almond
C & G Staff Writer
ROCHESTER — Taxpayers in the Rochester Community Schools district may soon have a little more spending money.
Acting on the advice of Dan Romzek, the district’s assistant superintendent for business, along with outside financial advisors, the Board of Education voted Aug. 13 to refinance the district’s 2004 building and site bonds, saving $2.9 million over the life of the bonds, which mature in 2020.
“To get numbers like these took some skill and expertise, and we appreciate the savings that our district will have over the next eight years or so,” Board of Education President Jennifer Berwick said.
Proceeds from the 2004 bonds were used to renovate and expand Van Hoosen and Reuther middle schools, renovate the Alternative Center for Education high school, upgrade athletics departments, replace technology and renew various facilities.
Romzek said the current low interest rates in the municipal bond markets have given the district the opportunity to achieve savings on the interest rates set in the 2004 bonds.
“We received excellent pricing on these refunding bonds, and we will save a significant amount of money — in terms of interest costs — over the remaining years of these 2004 bonds,” he said.
The savings will not have an effect on any aspect of school curriculum, but will rather come in the form of reduced millage rates over the next several years.
The total cost for prior debt service for 2013-20 was $35.19 million, according to district officials. After the refinancing, it decreased to just over $32.3 million.
The district’s financial advisor, Mike Givler of Umbaugh and Associates LLC, said RCS happened to hit the market at a great time.
“The 10-year bonds hit a low point … so we can’t complain a lot,” he said.
When officials initially looked into refinancing the bonds, advisors estimated that the move would likely result in savings of about a 6.8 percent. The newly refunded bonds sold at a 1.66 percent interest rate over eight years, Givler said, for a savings of approximately 7.9 percent. The reduced interest expense that will come as a result of the refinancing will save taxpayers a net total of $2.9 over the life of the bonds.
“We improved on where we were when we first started,” Givler said. “An 8 percent savings is very excellent, to say the least. The market was good to us.”
Givler noted that part of the reason the district was able to achieve the savings was due to its AA- bond rating, which he said is “excellent.”
“School districts here in the state struggle to, especially, get into the AA range,” he said.
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