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Refunding of Construction Debt Saves over $600,000

posted Dec 13, 2011, 1:04 PM by A.J. Calderone   [ updated Dec 14, 2011, 5:27 AM ]
Last month, the District closed out the process of refunding $5,049,995 of construction debt generated for the original school construction project.  In 2002, the LaBrae educational community, in partnership with the state of Ohio and the Ohio School Facility Commission, approved the bond issue that provided the necessary funds for the local match needed to construct the current LaBrae Complex, which houses grades 3-12.  
In early September, the Board approved the pursuit of refunding the remaining construction debt.  The refunding process is similar to the premise by which a homeowner refinances the remaining debt on their mortgage.  The thinking is that when you refinance your home with a lower interest rate, you still owe the same in principal, but generate savings in interest costs realized through the lower rate.  Likewise, the Board was intent on generating savings by taking advantage of historically low bond rates.  Initial estimates projected that the refunding process would safely generate $325,000 in savings to the taxpayers of the community.  Upon the close of the refunding process, the Board and Treasurer were thrilled that the actual savings realized were far greater than initial projections.  With extremely favorable bond market conditions at the time of the closing, the District was able to create $631,644.17 in savings!  
Now that the District needs to collect less money to pay for the interest costs of the remaining principal borrowed, it can begin the process of passing along the savings to the community.  Each year the Auditor's office consults the District treasurer as to how to adjust the bond millage so that the District is able to collect an appropriate amount of money to pay the necessary principal and interest on the bonds.  Over the remaining life of the debt, with expected payoff in 2024, taxpayers of the community can expect to see slight decreases in their property taxes associated with the original bond issue.  On an individual taxpayer basis, the savings are small.  However, as a whole, the $631,644.17 savings is phenomenal. 
The leadership of the LaBrae Board of Education, and the prudent money management of District treasurer, Carol Jones, are to be lauded for the pursuit and successful completion of this monumental cost savings measure.  Additionally, it serves as an important reminder that the Board of Education continues to be good stewards of taxpayer money.