By Judy Sheridan
Aledo ISD taxpayers got a bigger-than-bargained for savings last week when the district pulled the trigger on refinancing some $26 million in bonds.
Bigger than the $2.5 million predicted by the district’s financial advisers in November.
Even bigger than the $4.2 million estimated in December, as interest rates continued to drop, advisers added more bonds to the sale and trustees gave the go-ahead, contingent on optimum market conditions.
The actual net savings to the district’s taxpayers as of April of 2013? It’s $4.5 million, Aledo ISD CFO Earl Husfeld said.
“It amounts to $240,000 per year of savings for our taxpayers,” he said. “That’s close to one penny on the tax rate.”
For the $8.9 million in tax-exempt bank qualified bonds, the interest rate went from 5.03 percent to 2.33, for a savings of $2.3 million. For the $17 million in taxable bonds added later, the new interest rate is 2.41 percent, down from 4.89, for a savings of $2.3 million.
The savings will be realized over the life of the bonds — instead of in the short-term — to take advantage of the greatest savings and help the district manage its tax rate over the 20-year period, Bill Gumbert, of BOSC, Inc., told trustees in December.
Credit rating upgraded
As the district completed the refinancing, Standard & Poor’s Rating Services raised its issuer credit rating from “A+” to “AA-” on the district’s outstanding bonds.
The new rating, Husfeld said, is due primarily to Standard & Poor’s view of the district’s significantly strengthened financial position.
“This is extremely positive news for the district,” he said. “It underscores the financial strength of our district through its historically conservative financial management style. It also happened in spite of the state reducing public school funding.
“Generally speaking, there are not a lot of school districts our size that have this “AA-” rating. The districts that do most often have many more students and a larger property tax base.”
The better credit rating will allow the district to secure a lower interest rate when it sells bonds in the future, Husfeld said.