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Central Consolidated board approves prepayment plan to reduce bond interest and preserve tax-rate eligibility
Summary
The school board approved a defeasance resolution to prepay portions of the district's 2014 and 2015 general obligation bonds using excess debt-service cash, preserving eligibility for state waivers and saving residents an estimated $571,000 in interest over three years.
The Central Consolidated School District board voted to authorize district staff to transfer excess debt-service cash to defease portions of the 2014 and 2015 general obligation bonds, a financial move the district's advisers said preserves the district's tax-rate eligibility for state capital outlay waivers and reduces interest costs.
Nick, a Stifel public-finance representative, told the board the district discovered about $9 million of excess cash in its debt-service (41,000) fund. Using that cash to prepay debt would lower upcoming interest obligations and maintain a total residential tax rate above a threshold that supports additional state waivers, the presenter said.
"Paying off the 2027, '28 and '29 maturities saves residents about $571,000 in interest payments over the next three years," the adviser said, estimating roughly a 7.4% savings on the affected maturities.
Board members asked procedural and benefit questions; advisers said the defeasance also preserves the option to issue the district's newly approved bonds next year without a tax increase because outstanding debt would be reduced. The board approved the resolution by roll call and gave the superintendent authority to make the fund transfer and execute the escrow agreement.
Next steps: staff will execute the escrow arrangement and confirm accounting and reporting to the Public Education Department and other oversight entities.
