School bonds could be refinanced

Jay Schools could save about $1.6 million in interest payments by refinancing the bonds used for the high school renovation project in 2006.
“There are some opportunities,” school corporation business manager Brad DeRome told Jay School Board on Monday night.
DeRome noted Jay Schools currently has $47,054,536 in long-term debt obligations. Those range from building projects of about $20 million to pension bonds of about $8 million and $13.8 million for the 2006 Jay County High School renovation project.
“We currently are on pace with all of the various amortization schedules for these outstanding debt issues to pay down this debt at about $1.5 to $2 million per year,” DeRome reported. “These long-term debt issues would be completely paid off by 2027.”
The JCHS renovation bonds would be eligible for refinancing during the first quarter of 2015. They were issued at about 4 percent interest and could be refinanced at about 2 percent, with the same 2027 pay-off date, DeRome noted.
“It’s certainly something we think we want to consider,” he said.
DeRome and Damian Maggos of George Baum and Company outlined three different courses of action the board could take.
The first would be a simple refinancing, which would lower payments from the debt service fund over the life of the bonds.
A second option would be to refinance and keep the debt service payments the same then issue new bonds to capture the savings.
“This option allows the payments to be the same but allows us to receive money (about $1.5 million) to put toward new projects,” said DeRome.
A third option would to be to refinance and use the saved money to retire one of the energy savings debts that is currently being paid off using capital projects funds. That would relieve pressure on the capital projects fund by shifting the obligation to the debt service fund.
The question, said Maggos, is “what’s the best way to use those savings.”
Board members will revisit the question at their December meeting.
“We’ll put together some recommendations,” superintendent Tim Long said.