Belding Schools Seek to Save $ 2.5 Million in Deposit Repayment
BELDING – School officials in the Belding area are looking to save around $ 2.5 million in the coming years through certain financial repayment opportunities.
During Monday’s meeting, the Board of Education voted unanimously to approve a pair of repayment opportunities tied to the district’s School Loan Revolving Fund (SLRF) balance and 2015 debt.
Superintendent Brent Noskey told the Daily News that these opportunities are available to the district due to the changing nature of bond rates.
“PFM (Public Financial Management of Ann Arbor) is our financial advisor who oversees our obligations,” explained Noskey. “A lot of our bonds are tied to the Michigan revolving debt fund that they offer to public schools. When you opt for a bond, the tax base will not cover the payment of interest on the initial portion of that bond. Basically, you borrow bonds from that bond fund and then pay them back over time, just like a real estate payment.
“What PFM does, they are constantly monitoring bond rates,” he continued. “Over the years, bonds can fluctuate five to seven percent over a period of time. They (PFM) constantly monitor where the bonds sell. If they see that it drops below a certain threshold, they contact us to tell us that this bond would qualify with these current bond rates. “
According to Executive Director of Finance and Operations Ross Hinkle, the school district was contacted about the SLRF and the 2015 debt repayment about a month apart.
“We thought doing them together would be a great option,” Hinkle noted.
The district is looking to save $ 1,427,091 on the SLRF balance and $ 1,148,783.90 on the 2015 debt repayment. In total, this brings the district’s potential savings to $ 2,575,874.90.
According to Hinkle, the SLRF and the 2015 debt are not directly related to each other.
“SLRF is where we, as a district, borrow money for the purpose of paying off district debt,” he noted. “We have several different debt funds on the books for different loans over the years. The amount of taxes we collect each year does not match the amount of debt repayments we have to make each year. The SLRF is set up to give school districts a borrowing option to make debt fund payments. “
While Hinkle says the $ 2.5 million for the district is not yet set in stone, steps are being taken to ensure it is.
“Documents are already being processed to move forward,” he explained. “The $ 2.5 million does not vest, as PFM and Stifel (the district underwriter) will go into the open market to sell the bonds. Depending on the interest rates on the given sale date, this could increase or decrease total savings. The savings are spread over the years of repayment to also help support the district’s cash flow. “
According to Hinkle and Noskey, refinancing opportunities will save taxpayers money for years to come.
“By refinancing (the SLRF) or any other debt fund, we are reducing the total amount that local taxpayers will have to pay to the district. Win-win for all parties involved, ”summed up Hinkle.
“It’s not like we’re going to take the money we get and spend it on something else,” Noskey added. “With bonds, that means you pay them off faster. Later, if Belding needs a new college and we’ve given up five of our obligations five years earlier than planned, it’s easier to go to the taxpayer and show them first that we’ve already done away with it. this amount of taxes he had. paid.
Noskey expressed his gratitude to the school board for allowing the district to seize these beneficial financial opportunities.
“Since I’ve been here, that brings us to almost $ 5 million that we’ve saved taxpayers just by watching rates. It’s no different from people who own a house and watch interest rates, ”he explained. “… I congratulate the Board of Directors for giving us the green light to continue to seek out these savings opportunities. We always want to be fiscally responsible to the taxpayers and the district.