Leavenworth Board of Education members approved a resolution Wednesday that may lead to savings of $1 million through the refinancing of bonds.
“We’re taking advantage of the lower interest rates,” said Kevin Gullett, chief financial officer for the district.
He reviewed the proposed refinancing of bonds during a special meeting.
He said officials are proposing the refinancing of bonds that were issued in 2008 and 2009 as part of a $58 million bond issue.
He said the total debt service for the bonds being targeted for refinancing is $14.19 million. The average interest rate for these bonds is 5.23 percent.
It’s estimated the bonds can be refinanced through the sale of what are called refunding bonds with an interest rate of 2.33 percent. The total debt service for the new bonds will be $13.19 million.
Gullett said this would result in a savings of $1 million.
He said the $1 million reflects the amount of savings that will be seen over the life of the bonds. He acknowledged $1 million several years from now likely won’t be worth the same as it is today. When adjusted, the present value of savings totals $849,364.
Officials acknowledged there is no guarantee that the refinanced bonds will be sold with a rate of 2.33 percent. But Gullett said in the 12 years the district has worked with Oppenheimer & Co., the amount the company has projected always has been what the district has received. Oppenheimer & Co. will be acting as the underwriter for the sale of the bonds.
Brad Max, senior managing director for Oppenheimer & Co., said concerns about the “fiscal cliff” the federal government is facing at the end of the year is helping to drive down interest rates as people are taking money out of riskier transactions and investing in fixed-income securities.
He said the sale of the new district bonds is tentatively scheduled for the week of Dec. 10.
The resolution, which was approved unanimously, authorizes officials to take the necessary action to carry out the sale of the refunding bonds.
Additional action related to the refinancing will be required when board members meet next month.