Pulaski County Special School District leaders are taking preliminary steps to partially refinance a 2015 bond issue as a way to save approximately $1.6 million in debt service payments by 2022.
Pulaski County Superintendent Charles McNulty said he anticipates the district using the savings for updating curriculum materials.
The School Board for the district voted 6-0 Tuesday night to authorize Stephens Inc. to file on the district's behalf an application to the Arkansas Board of Education for permission to issue re-funding bonds.
If the state approves the application, the new bonds would be offered for sale if and when interest rates are low enough to generate debt payments savings to the district, Jack Truemper of Stephens told the board.
The district issued bonds in September 2015 to raise $69.7 million for construction costs, of which $65.45 million is still outstanding. That entire debt can't be refinanced until 2021, Truemper said, but $58.9 million of it can be re-funded if current interest rates are low enough to create an interest-cost savings for the district.
Unlike the original 2015 bonds that were tax-exempt, the new bonds would be taxable, meaning the investor or buyer of the new bonds would pay federal and state income taxes on their interest earnings.
"Interest rates going back to about the end of March have gotten real low and are providing us with the opportunity of converting tax-exempt bond issues to taxable bond issues because the taxable rates are lower than the tax-exempt rates," he said.
But Truemper said the financial market is fluctuating.
"Honestly these things can change with a tweet," he said, referring to President Donald Trump's social media posts on Twitter and their potential to affect the markets. "We want to get ourselves ready so that when there is an opportunity, we can move," he said.
The re-funding plan calls for nearly all of the savings in debt payments to occur in the next few years.
The district's debt service payment on the 2015 bond issue is $948,790 this school year, almost $1.9 million in 2021 and more than $5 million a year until 2035. The proposed re-funding plan would reduce this school year's payment by $589,790. The savings could be $460,314 next school year and $605,314 in the 2021-22 school year. In subsequent years, the annual savings most years would be less than $3,000.
Metro on 09/11/2019