The Warren County School District will be able to save $105,086.73 as a result of a bond refunding which was approved by the school board during a special meeting on Monday night.
Jamie Doyle with PFM, Inc. said that she was "extremely pleased with the competitive internet sale process" that allowed the district to lock in the lower interest rate.
In laymen's terms, the district issued a new bond that will be bought by a bondholder that will charge a lower interest rate than the district previously paid. A bond refunding can be compared to a homeowner refinancing a mortgage in order to acquire a better interest rate.
"(The) interest rate environment has gone upward since mid-June," Doyle explained. "Today's results exceeded my expectations." She noted that the Federal Reserve recently decreased its bond buying and, as a result, "the market had a knee-jerk reaction" resulting in the "most volatile three consecutive days of the last 25 years."
Because the district's refunding window on these bonds only extends for the next four years, Doyle said that the market fluctuation had "a lesser effect on" the refunding.
The sale was held on Monday from 11 a.m. to 11:15 a.m. and 99 different bids were received. Doyle said that the bid amount was the highest that PFM has seen.
The district will still have to make a scheduled Sept. 1 payment on the 2008 bond issue as the refunding will not take effect until Sept. 5.
The firm of Janney Montgomery Scott submitted the winning bid.
The March 1, 2014 interest payment on the bonds will be $40,406.67. In 2017, that will drop to under $13,000. Total savings to the district with the lower interest rates is projected at $105,086.73.
"Again, I was very pleased with the competitive bids today," Doyle noted.
Board President Arthur Stewart said that the savings is "high than we anticipated. We're very appreciative."
Jim Grosch, the district's business manager, said that the 2008 bonds were also a refunding of bonds issued in 2001 and 2002. The district saved $226,409 as a result of the 2008 refunding.