Genesee School District Refinances Bonds
The Genesee Joint School District has decided to refinance the bonds from its 2007 bond levy in order to take advantage of historically low interest rates. This bond refinancing will save the school district’s taxpayers over $560,000 in interest cost on the bonds while shortening the repayment term. The 2007 bonds were issued to finance the addition to the high school including the auxiliary gym and additional secondary classrooms. District officials chose to keep the bond payments the same and utilize the interest cost savings to shorten the repayment term which maximizes taxpayer savings in the long run.
The Genesee Joint School District finalized the bond sale on January 10th, locking in an interest cost of 2.65%. The District was paying an average interest rate of 4.22% on the old bonds.
The District’s bond underwriter, Eric Heringer from the Boise office of Piper Jaffray & Co., said that a major reason for the District being able to secure such low interest rates was that it has done a great job managing its finances: “The District was awarded an “A+” bond rating from Standard & Poor’s due to conservative financial management that has resulted in healthy general fund reserves. Bond investors are paying close attention to the financial stability of entities that issue bonds as a result of high profile municipal bankruptcies such as the City of Detroit. Without a solid credit history and sound financial management, the bonds would not have achieved such a high bond rating. A lower bond rating would have resulted in higher interest rates and reduced savings for the taxpayers of the District.” Mr. Heringer went on to say “the District also has a very low debt burden and a history of strong community support for public education, which are additional positive credit factors.”