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Board authorizes transfer of funds and escrow to defease 2021 general obligation refunding bonds
Summary
The board approved a resolution to transfer funds and establish an escrow account to defease portions of the district's 2021 general obligation refunding bonds, reducing principal and generating estimated net debt-service savings of about $587,166 and increased state aid estimated at $1,254,295.
The Wisconsin Rapids School District Board of Education on April 14 approved a resolution authorizing the transfer of funds and establishment of an escrow account to defease parts of the district’s General Obligation Refunding Bonds, Series 2021 (issued 08/02/2021).
Finance staff explained the defeasance targets four specific principal years and estimated the restructuring would remove roughly $3,950,000 of principal from future debt service schedules, reducing outstanding principal and smoothing annual debt payments. After defeasance and accounting for a recent principal payment, staff said the adjusted remaining principal would be approximately $15,985,000.
Estimated fiscal effects presented to the board included net debt-service savings of $587,166 (present-value reduction in future interest payments) and an anticipated increase in state aid next year of about $1,254,295 due to the defeasance, which staff said could reduce the district’s mill rate in the following year by approximately 1.25 mills. The presenter described the action as fiscally advantageous, saving taxpayers interest costs while increasing next year’s state aid entitlement.
Votes and procedure: a motion to approve the resolution was made and seconded; a roll call vote was taken and board members present voted in favor as recorded in meeting minutes. After the vote board members thanked the finance staff for the fiscal work.
Ending: The board approved the resolution; staff will complete escrow account establishment and defeasance transactions per bond counsel and trustee instructions.
