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Board approves defeasance resolution for 2021 refunding bonds, board says move will save interest and increase state aid
Summary
The board adopted a resolution to establish an escrow and defease portions of the district's General Obligation Refunding Bonds, Series 2021 (dated Aug. 2, 2021), a move staff said will reduce net debt-service costs by about $587,166 and increase state aid by an estimated $1,254,295.
The Wisconsin Rapids School District board on April 14 approved a resolution authorizing the transfer of funds and establishment of an escrow account to defease portions of its General Obligation Refunding Bonds, Series 2021 (dated Aug. 2, 2021). District finance staff said the action will remove approximately $3,950,000 of principal from future debt-service schedules for the identified callable years and will produce estimated net debt-service savings of $587,166.
Aaron, the district finance presenter, explained that after the defeasance the total outstanding obligation will be approximately $15,985,000 (the presenter noted a recently paid principal reduced a larger figure slightly). He also said the defeasance will increase the district's state aid estimate for the next year by about $1,254,295 and that the combined effect will reduce interest costs and improve the district's fiscal position going forward.
Board members moved and seconded the resolution authorizing the transfer of funds and establishment of the escrow; the motion passed on a roll-call vote. Presenters said the action is part of an annual practice during the pandemic era to manage debt and smooth the district's principal-payment schedule while preserving planned annual principal payments.
The board thanked district finance staff for the work; administration said the defeasance is expected to provide taxpayer savings in interest and to affect next year's state-aid calculation. The motion and roll-call were recorded in the minutes; staff will execute escrow arrangements and related bond-administration steps following board approval.
