Richland schools’ move to refinance and pay down high school project debt will save the district $332,000 annually, school officials said.
But while the move will save the district an estimated $2.1 million over the life of the bonds, board members said it’s simply buying the district time, given rapidly rising, state-mandated retirement fund contributions.
“We’ve been trying to find creative ways to cut our costs, and this refinancing was a window of opportunity for us,” board President Anthony Rizzo said, noting market conditions can quickly change. “It was a one-shot deal – and we need it.”
The district has eyed refinancing the approximately $47 million in debt for several months, working with Philadelphia-based firm Boenning & Scattergood Inc. Its hopes were boosted earlier this spring, thanks to better-than-expected refinancing conditions that projected the district’s savings at more than $700,000 than the board originally expected.
On Monday, the district unanimously voted to push forward with the refinancing. It also voted to use $3.5 million set aside in the general fund to pay down the debt, further cutting the annual debt obligation, board member Ray McCombie said.
The district will still have approximately 20 years of payments on the debt. That won’t change, McCombie said.
The district could have taken its savings up front or use it to knock a few years off its payment schedule, but spreading the savings out was the better move, he said.
“To me, it was a no-brainer,” McCombie said. “If this buys us a few more years without raising taxes, it’s worth it.”
Like most other public schools in the state, Richland will need extra wiggle room in the years to come, Rizzo said.
Costs are rising across the board and revenue doesn’t keep pace. And the state’s current Public School Employees Retirement fund contribution formula currently has the district on the hook to pay $364,000 more for the 2015-2016 school year alone, he said. Another $340,000 spike is projected for the following school year before dropping a bit afterward, Rizzo said.
“If something doesn’t happen in Harrisburg, it’s going to be big trouble for all of us,” he said. “At least refinancing will slow down the bleeding.”
David Hurst covers Richland for The Tribune-Democrat. Follow him on Twitter at www.twitter.com/tddavidhurst.