Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Finance Debt Defeasance topic
No spam. Unsubscribe anytime.
Milton board hears plan to defease $4.275 million in bonds, staff aim to cut $2.9 million in interest costs
Summary
A Baird analyst told the Milton School District board the district can escrow roughly $4.275 million to defease 2019 bonds callable on 03/01/2027, shortening the debt schedule and producing combined savings of about $2.9 million when combined with an earlier defeasance. Board action is expected March 9.
The Milton School District board received a detailed briefing on a proposed defeasance of about $4.275 million in debt tied to bonds sold in 2019, a move district consultants say will shorten the borrowing schedule and reduce future debt service.
Kevin Mullen of Baird, invited to the board after a finance-committee review, explained the mechanics and timeline for the transaction. “This defeasance is actually the action of paying off the debt,” Mullen said, describing how the district would place levied funds in an escrow account and direct the paying agent to call the bonds when they become callable on 03/01/2027. He told the board the funds would be invested in the escrow and that the defeasance would remove the debt from the district’s books once executed.
Mullen estimated the immediate savings from this defeasance at roughly $1.535 million for the transaction and noted that combined with a defeasance completed in 2023 the total reduction in interest costs is about $2.9 million. He also outlined transaction costs: bond counsel, CPA verification and other fixed fees of about $17,000.
Board members asked for clarification about source funding and timing; staff confirmed the levy funds to pay for the defeasance have already been collected and that no additional levy will be sought for this transaction. According to presenters, the board will be asked to approve a resolution to proceed at the March 9 board meeting and staff expect to assemble the escrow before June 30.
Why it matters: defeasance reduces scheduled principal and interest tied to the 2019 borrowing and trims future budget pressure by shortening the debt window and lowering annual debt-service obligations. The board’s acceptance of a resolution on March 9 would be the formal authorization to proceed toward closing the escrow.
Next steps: the board will consider a resolution at its March 9 meeting; if approved, staff and advisors will finalize escrow investments and the transaction mechanics ahead of the bonds’ call date.
