School Board Votes To Refinance Outstanding Debt
May 18, 2020
By Tom Tolen / firstname.lastname@example.org
The Brighton Board of Education took a step last week toward saving interest costs, while approving a line of credit to avoid having to go to the state’s Revolving Loan Fund and borrow this summer.
The board voted to go to the bond market to refinance its outstanding debt from several past school bond issues. Among these are the $59 million bond issue that passed last November which is paving the way for several improvements to begin this summer and the $89 million bond passed in 2012. According to Assistant Superintendent for Business and Finance Mike Engelter, the reason for the refinancing is to take advantage of the exceptionally low interest rates right now. He expects the district to get an interest rate of between two and three per cent on the bonds, which he says will save “millions of dollars” in interest if refinanced over a 20-year period.
Engelter says the district will go to prospective investors Tuesday, May 19th, with closing to take place a month later. The firms that will co-manage the refinancing are Stifel, Nicolaus & Company and Huntington Securities.
In other action, the board approved establishing a line of credit for up to $6 million this summer to meet district financial obligations, including staff payroll and paying bills. According to Superintendent Greg Gray, the district may not need to use the line of credit, resulting in interest savings. But he says it is wise to have the line of credit there as a safety net. Gray says Brighton and other school districts can run into a cash flow issue during the summer, stemming from the fact that the state’s fiscal year is different from that of local school districts. The state’s fiscal year runs from Oct. 1-Sept. 30, while the fiscal year of school districts extends from July 1-June 30. This results in a lag time — when districts can run short of funds to meet their financial obligations — until the first state aid payment arrives in late Sept. or early Oct.