Refinancing To Save
While the Warren County School District lost $300,000 in the Qualified Zone Academy Bond program as a result of the federal budget cuts known as sequestration, an opportunity to save $2 million over the next 20 years on the same bonds has presented itself.
Business Manager Jim Grosch explained to the school board’s Finance Committee on Monday the district is paying back the bonds by making payments into a sinking fund that is invested and yields a 2 percent return to the district.
“Because of bond markets, interest rates going up, (we) would be able to lock in future returns now at current rates,” Grosch said. While the amount of interest returns is capped, he said that the district will now be receiving 3.14 percent.
“In a nutshell, instead of getting 2 percent, (we) will get the maximum of 3.14 percent allowed by law,” Grosch added. “It’s going to look like a $2 million savings over the next 20-some years. It’s going to be substantial to us over a 25-year period.”
He explained that the board does not need to authorize administration to pursue locking in the new rates because the board gave administration the latitude to make those changes when the bonds were originally approved.
“(It’s) not signed, sealed and delivered yet, but we expect it to be shortly,” he added.