Brighton School District Saves Millions On Bond Refinancing
May 30, 2020
Correction: A previous version of this story incorrectly reported the savings from the 2019 bond to be $25 million. The correct number is $2.5 million. We regret the error.
By Tom Tolen / firstname.lastname@example.org
By any stretch of the imagination the recent bond sale conducted by the Brighton Area Schools was wildly successful.
According to Assistant Superintendent Michael Engelter, the district - and therefore district taxpayers - will be saving millions of dollars on each of the three transactions. The reason for the significant savings is that the Brighton Area Schools jumped two positions in its credit rating with Moody’s Investors Service, a top American credit rating agency - to “A-3”. The most recent bond issue was the $59 million bond issue that passed last November, which will be used for numerous school improvements, mostly beginning in 2021. Engelter says the bonds were sold at between 1.02% and 2.79% interest - better than the district anticipated and saving the district $2.5 million over the life of the bonds.
The district also refinanced the $89 million bond issue that passed in 2012, getting a 1.02% to 2.84% interest rate - a gross saving of $5.39 million in interest over the life of the bonds. Finally, the district refinanced its $48 million debt to the Michigan School Loan Revolving Fund. Whereas the state charges an interest rate of 3.1%, going to the bond market to refinance the loan reduced the interest rate to 0.934 % in one series and 1.28% interest in a different series. The net result is a savings of $2.59 million for district taxpayers.
Engelter says he is “extremely happy” with the results of the bond sale and refinancing, remarking that it is more evidence of the district's continued financial rebound. In his words, “We’ve come a long way.” Overshadowing all of this, of course, is the expected cut in per-pupil funding from the state due to the COVID-19 shutdown and the effect on Michigan’s economy.