Earlier this year at a regular meeting of the Silex R-I School District Board of Education, a refunding bond resolution was approved. It authorized the sale of $1,475,000 General Obligation Refunding Bonds at an average interest rate of 1.68 percent, compared to the combined callable Series 2008 and Series 2010 Refunded Bonds which carry an average interest rate of 3.94 percent.
Proceeds from the Series 2013 Refunding Bonds were used to prepay $1,300,000 of principal on the Series 2008 Bonds and $175,000 of principal on the Series 2010 Bonds on March 1, 2013. The district reduces the future interest expense by $176,907. This $176,907 plus the savings of $360,022 from the Series 2010 and Series 2003 refundings plus $35,062 of avoided interest expense the district achieved by paying off early its Series 2007 lease on Sept. 1, 2012, means that the district saved $571,991 of interest expense since 2003.
Superintendent of Schools, Elaine Henderson, expressed enthusiasm for the refunding option selected by the district’s Board of Education. “This plan does not materially change our existing annual debt service payments, while preserving flexibility for the district to accommodate additional new money general obligation bonds in the future that do not require an increase in the debt service fund levy,” Mrs. Henderson remarked.
Ken McDonald, past board president, pointed out that the $176,907 of interest savings for the Series 2013 refunding is not all the district may realize. The Series 2013 Refunding Bonds have a call feature in 2015 at no penalty. “If interest rates are lower in 2015 or later, we can take advantage of that. Meanwhile we are locking in these levels that are over two percent (2.00 percent) lower than they were in 2008 and 2010,” stated McDonald.
L. J. Hart & Company of St. Louis, prepared the refunding proposal and explained how it can fit into the long range plans of the District. Tom Pisarkiewicz, vice president with the firm, mentioned that the three significant factors making the Series 2013 refunding possible were: the unprecedented low interest rates in the current market, the fact that the Series 2008 and Series 2010 Bonds were subject to prepayment on March 1, 2013 at no penalty, and the district’s ability to participate in the State of Missouri’s Direct Deposit Program.
This program makes it possible for the District to receive a “AA+” rating from Standard & Poor’s Corporation on the refunding bonds. Amanda Weis, senior financial analyst complimented Mrs. Henderson for her prompt and thorough preparations to supply the data necessary for the rating application and official statement, as well as the board of education for their foresight in making the Series 2008 Bonds callable in five years and the Series 2010 Bonds callable in three years.
Ms. Weis noted that Silex Banking Company and Community State Bank of Missouri purchased bonds which were very helpful to the success of the financing. “It is nice to be able to save $176,907 of our taxpayers’ money and boost our total savings to $571, 991,” remarked Gabe Twellman, current school board president.