By Sara Hall | NB Indy
Newport-Mesa school district trustees moved this week to save its taxpayers some $3 million through a refinancing of its bond debt.
In 2000, voters approved borrowing $110 million for school modernization. The modernization changes included Internet connection, plumbing and electrical upgrades, painting and other improvements, said Deputy Superintendent and Chief Business Official Paul Reed.
Newport-Mesa Unified School District sold the bonds in 2001 and 2003, has paid off $15 million from that debt since, and is scheduled to pay off the rest of the debt by 2028.
This week, the board approved a resolution to allow the district to refinance the bonds and save money through a lower interest rate.
“Because interest rates are so low (right now) there are opportunities to refinance,” said Reed.
Refinancing the remaining $95 million in debt will save approximately $3 million over the remaining 18 years of life of the bonds, Reed said.
Reed compared the situation to how a home can be refinanced when the economic climate presents money-saving opportunities for homeowners. In the district’s case, the refinancing takes the form of issuing a new series of bonds and the process is called “refunding.”
“In practice, the district borrows the needed sum of money in the public finance market sufficient to pay off the holders of the old bonds. Since the new bonds are issued at a time when competitive rates are lower, the overall cost of paying off the bonds is less, resulting in a savings to the taxpayers,” Reed wrote in the agenda.
The board also approved another, completely unrelated, resolution regarding bonds: The application to the California Department of Education for funds that were allocated for school construction projects from the federal American Recovery and Reinvestment Act.
The recovery act limits the dollar volume of the Qualified School Construction Bonds that may be allocated in 2011 to $11 billion, of which the state of California was allocated $720,058,000, according to a district staff report.
“(The application is) to utilize the bond proceeds for specific projects,” said NMUSD spokeswoman Laura Boss.
In order to be eligible, the district must give their application, supported by a resolution from the board, to the department of education by Nov. 5. If funding is approved and allocated, the district may use the funding for Measure F projects, the rehabilitation or repair of public school facilities, which can include the acquisition of land or equipment for the rehab work.
The interest cost of the construction bonds is subsidized through the allowance of tax credits to investors or direct subsidy payments to school districts.
“It allows us to sell bonds at basically zero interest,” Reed explained, and people would buy the bonds, he added, because the government will give them a tax credit.
The maximum amount the district can apply for is $25 million, Reed said.
The board also approved the resolution to recognize the month of October as Bully Prevention Awareness Month within the district.
The designating of the month is meant to be a represent the district’s “commitment to year-round struggle against bullying,” the resolution states.
Assistant Superintendent for Secondary Education Charles Hinman and Director of Student Services Becky Bishai reported on the programs and activities at the school sites that focus on bullying awareness and prevention.
“This resolution acknowledges and heightens awareness about the serious issues and the negative effects of bullying,” the agenda detail states.