District financial team and PFM outline potential $5M'$6.6M savings from bond refunding

Rochester Community Schools finance leaders and municipal advisor PFM briefed trustees on a proposal to refund outstanding district bonds, presenting estimated interest savings and the mechanics of a refinancing.

PFM managing director Nate Watson told the board that the district could realize an estimated $5.5 million in savings under current market assumptions, and later described a higher estimate of about $6.6 million based on last week's tax-exempt rates. "Total cash flow savings...savings of interest is about $6,600,000," Watson said during the presentation, while cautioning that market rates change and that savings estimates are not locked until pricing.

Administrators said the recommendation followed review by the superintendent's business and operations committee and that the board would need to decide whether to pursue a competitive sale or a negotiated sale method. Watson described the tradeoffs: competitive sales require a fixed notice period and date, whereas negotiated sales offer more flexibility to adjust timing closer to pricing.

Trustees raised several questions. One asked whether the district should delay a refunding to capture potentially lower rates; Watson replied that long-term rates are uncertain and that bonds are callable beginning May 1, 2026, meaning the district could refinance within a defined window. Another trustee pressed for clarity on an apparent discrepancy between reported staffing increases and falling enrollment; administrators said some of the reported increase could reflect contracted staff and timing differences in state reporting and grant year accounting.

Finance staff also reviewed general fund numbers and special revenue funds, and noted recent accounting changes (GASB standards) that affected footnotes. A consent agenda item that evening included a $364.71 reimbursement for Superintendent Russo; the board approved the consent agenda 7-0.

PFM and district staff did not ask the board for an immediate vote to refund the bonds that night but invited questions and laid out the schedule if the board chooses to move forward: board approval would initiate the working group of bond counsel, municipal advisor and underwriter and a pricing process that runs over weeks to months before final issuance.

If the board later approves refunding, staff said the transaction would be structured so bond issuance costs are rolled into proceeds and savings are presented net of issuance costs. The district will return to the board with final pricing and a recommended sale method before any lock-in.