Bonds issued in 2006 to construct Pioneer Ridge Middle School may be refinanced, members of the USD 231 school board were told at their Sept. 12 meeting.
“The board president and superintendent want a well-balanced approach to budgeting that takes every opportunity to lower the mill levy, while at the same time providing the financial resources needed for our students and staff,” Jeremy McFadden, finance director, explained later. “While the average patron may not be excited about a bond refunding, lower debt service costs have a profound impact on continuing to provide a quality education in Gardner Edgerton schools.”
Series 2006-B bonds were issued as part of the Feb 1, 2005 bond election for construction of Pioneer Ridge Middle School, the alternative education building (north of Nike), the maintenance/transportation facility (north of Nike), along with other capital improvements and renovations at Wheatridge and Nike.
The decision to issue refunding bonds is based on the assumption that market interest rates (which fluctuate daily) will not be materially higher on the date of sale.The planned sale date of Oct. 3, 2016, coincides with the next board meeting.
“If interest rates are significantly higher on Oct 3 that anticipated, the board has the option to not accept the lowest bid and simply cancel the refunding,” McFadden explained. “If rates are lower than expected, the savings will obviously be higher and a better outcome overall.”
In simple terms, the district can structure the new bond debt repayments to realize interest savings in targeted fiscal years.
“The district is proposing to accelerate interest savings to provide noticeable and immediate mill levy relief,” McFadden continued. The alternative would be to spread out the projected interest savings over the next 10 years, albeit at less noticeable savings for taxpayers.
“Lastly, the district wants to accelerate savings during the implementation of a new school finance formula, which should help ensure a stable mill levy under a new funding formula,” McFadden said.
Refunded bond savings do not provide direct financial resources for the classroom.
However, when the district has lower debt service, the board can choose to
1) lower the mill levy to benefit local taxpayers,
2) redirect the mill savings to other levy funds that can support the classroom (for example. increased LOB and Cost of Living), or
3) a combination of both.
In the last 4 years, the district has refunded bonds with the following bond issues:  2012-A, 2013-A, 2015-A, 2016-A, and the proposed 2016-B.
These refunded interest savings have helped the district to lower the overall mill levy, along with providing additional classroom resources through an increased LOB, McFadden said.