Given favorable bond market conditions and historically low interest rates, the district will for the second time this year refinance a portion of the school bonds voters approved in 2004 for a combined savings to taxpayers of more than $23 million over the next 13 years.
“This is about as big a win as we could imagine,” said Superintendent Tim Yeomans just hours after the latest bond refunding bids were opened on Nov. 28.
Refunding allows the district to issue new bonds at a lower interest rate to pay off existing bonds that were issued with a higher interest rate. This is the same concept as refinancing a home mortgage.
The school board is expected to review the bond sale results, including the lowest bid from J.P. Morgan Securities, at its next meeting on Dec. 10. The bond sale is scheduled to close on Dec. 11.
“Combined, the refunding of our bonds will save taxpayers $23.2 million, which is money that stays in our local economy,” said Yeomans. “The decision to move forward with the refunding is evidence of the school board’s vision and stewardship of public money.”
The savings is also reflective, Yeomans said, of the school district’s “exceptional credit rating” with the nation’s two biggest bond credit-rating agencies — Standard & Poor’s and Moody’s Investors Service.
Like good personal financial credit scores, better bond ratings, combined with positive bond market conditions and the timing of the bond sale, result in lower overall borrowing costs.
The latest bond refinance will save taxpayers $11.8 million over the next 13 years, or nearly one million every year.
The savings is nearly triple the amount the district had targeted earlier this month and reflects a historically low interest rate of 1.95 percent — down from nearly 5 percent on the old debt.
The savings flow directly to taxpayers through reduced tax levies. None of the money is available for district expenses, said Corine Pennington, the school district’s chief financial officer.
Last January the board approved a separate refinance of the 2004 voter-approved school bonds for a savings of $11.4 million over 12 years.
“This is a direct savings to our community members in the form of $23.2 million of property taxes they will not have to pay,” said Pennington.
The 2004 school bond paid for a variety of facility improvements throughout the district, including the construction of Carson and Edgerton elementary schools, as well as Glacier View Junior High; the replacement of Kalles and Aylen junior high schools; and a one-story classroom addition at Puyallup High.
The bonds also paid for the upgrade of junior high science labs; classroom additions and other improvements at Fruitland and Meeker elementary schools; remodels or other infrastructure work at Ferrucci Junior High and Northwood Elementary; the relocation of the Information Technology Center; special education classroom modifications; and districtwide technology improvements.
All of these projects were completed on budget and on or ahead of schedule.
State match money collected from the 2004 bonds have also paid for projects including a new field, track, and sound system at Sparks Stadium, as well as track and field improvements at Emerald Ridge High School.
Information provided by the Puyallup School District.