The Moniteau County R-1 Board of Education created a final-terms committee Aug. 21 to approve the sale of $3.69 million in general obligation refunding bonds to reap savings from available lower interest rates.
The municipal bond underwriter is L.J. Hart & Company of St. Louis.
On Aug. 23, the committee authorized the sale of the bonds at an average interest rate of about 1.99 percent, compared to 2.91 percent for the Series 2014 Bonds. By using the refunding bonds, the district will reduce the future interest expense by about $297,607.30. This $297,607.30 plus the approximate savings of $2,002,621 from the five previous refundings means the district has saved $2,300,228 of interest expense since 1993, officials said.
Superintendent of Schools Dwight Sanders expressed enthusiasm and support for the refunding option selected by the Board of Education.
"This plan achieves significant savings and allows the district to capture better conditions in the municipal bond market for the benefit of our taxpayers," Sanders said. "It also preserves considerable flexibility for the district in the future as we prepare for our April 2020 bond issue for building improvements as needed."
The refunding bonds were reoffered to local financial institutions and individuals. Board President Philip Burger said the $297,607.30 of interest savings for the Series 2019 refunding, which is an improvement of $3,200 from the Aug. 21 projections, is not all the district may realize due to the Series 2019 Refunding Bonds having a call feature in March 1, 2024, at no penalty.
"If interest rates are lower in 2024 or later, we can take advantage of that," Burger said. "Meanwhile, we are locking in these levels that are almost one percent lower than they were in 2014."
Courtney B. Wegman, vice president of 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. She said the three significant factors making the Series 2019 refunding possible were the lower interest rates than in 2014, the fact that the Series 2014 Bonds are subject to prepayment on or after March 1, 2019, 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 Global on the refunding bonds.
Wegman complimented Sanders and Gorrell for their prompt and thorough preparations to supply the data necessary for the rating application and official statement, as well as the Board of Education for its foresight in making the Series 2014 Bonds callable in five years.
The closing for the Series 2019 Refunding Bond issue is to occur Sept. 23. Several board members commended Sanders and L.J. Hart & Company for developing the attractive refunding plan.
"It is nice to be able to save $297,607.30 of our taxpayers' money and boost our total savings to $2,002,621 since 1993," said Joe Kirby, board vice president.