The Seward Public School board authorized its president and the superintendent to essentially refinance some of the district’s bonds.
During the board’s Nov. 13 meeting, the board accepted two resolutions on the topic.
The first is to call up to $9.265 million in principal amount for bonds issued in 2010.
The second is to authorize the issuance of up to $9.995 million in bonds to refund a portion of the 2010 bonds.
In a phone interview Nov. 16, Ameritas Vice President Marc Munford said this refinance will save the school district money in interest rate savings.
Ameritas is the underwriter for the bonds.
Munford said rates were not yet finalized, but he estimated $1.3 million in cash flow savings to the district. The district would pay less in interest, and it can pay off the bonds three years sooner.
To compare, interest rates on the outstanding bonds are around 3.76 percent. Munford said the new bonds, with fees, could have an interest rate of around 2.1 percent.
And by choosing to pay off the bonds three years sooner, Munford said the district avoids paying additional interest on bonds with higher rates.
The authorization, however, does not guarantee the refinance would happen, Munford said.
First, the new bonds have to meet certain parameters, such as not exceeding the principal amount of $9.995 million and interest rates not exceeding 2.65 percent.
If the new bonds do not fit those parameters, the district will not call or issue the bonds.
Munford said the authorization gives flexibility for the refinancing without having to go back to the board. This is important because no one can predict what rates will do.
“It’s more of a timing tool,” Munford said.
Munford also said the new issue is set at no more than $9.995 million because there is a cost to issue bonds. Setting the max rate higher gives wiggle room with those expenses.
School board members Paul Duer, Scott Pekarek, Lisa Dworak and Curt Sherman voted to accept both resolutions.
School board member Jerry Rumery voted against both resolutions because he supported a plan that had more short-term savings, rather than savings in the long run.
“The good news is both options have savings,” Rumery said.
School Board President Ryne Seaman abstained from both votes because his employer, Cattle National Bank and Trust Co., is designated to serve as the paying agent and registrar for the bonds.
