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Duncanville ISD authorizes resolution to explore prepaying bonds to cut interest costs
Summary
The board approved a resolution allowing staff and the district’s financial adviser to identify and pursue defeasance or redemption of callable bonds if excess debt-service funds are available, with an initial estimate that a $1.5 million prepayment could save more than $600,000 in future interest.
The Duncanville ISD Board of Trustees voted 5–0 on Sept. 15 to approve a resolution authorizing district officers to consult with the district’s financial adviser and to take actions to defease or redeem certain outstanding unlimited-tax bonds if funds are available in the debt-service fund.
Darla Moss, the district CFO, said the board’s resolution permits the CFO and superintendent to work with the financial adviser to identify prepayment opportunities that would reduce outstanding debt and save interest costs for taxpayers. Josh McLaughlin, the district’s financial adviser, told the board the district currently has roughly $322,000,000 of outstanding bonds, about $259,000,000 of which are callable prior to final maturity.
“We are thinking sort of a minimum of about $1,500,000,” McLaughlin said, adding that a prepayment of that size could save taxpayers more than $600,000 in future interest cost. He clarified that the exact savings depend on how much excess revenue is available, how much fund balance the district wishes to use and which maturities are targeted. He also noted defeasance (escrowing cash until bonds are callable) is an option if immediate redemption is not available.
Board members asked how a bond prepayment would interact with the district’s operating deficit; McLaughlin and Moss explained the district’s general fund deficit (about $18 million) is separate from the debt-service fund, which is projected to have a slight surplus. Moss said the debt-service surplus projection is about $1.5 million but final determinations will await TEA’s final rules and collection of property taxes after the district’s Feb. 15 bond payment.
McLaughlin described timing: once the February bond payment is made and the district has clearer state revenue numbers, the adviser and staff will calculate available excess revenue and present specific prepayment options and amounts to the board for approval. The board approved the resolution to authorize staff to pursue that analysis and return with a formal recommendation.
The resolution passed 5–0; staff said they will return to the board with any specific prepayment request before funds are committed.
