Like homeowners refinancing their mortgages, the Blair Oaks Board of Education took a similar step this week.
At a special meeting Tuesday, the board authorized the sale of $2.5 million in general obligation refunding bonds at an average interest rate of 1.8 percent. The new bonds will replace Series 2010 bonds that carried average interest rates of 3.47 percent - saving about $208,000 in future interest expenses.
The savings are on top of previous refinances that have saved the district $2.28 million over the past 17 years.
"We've been able to capture the benefit of historically low interest rates," Superintendent Jim Jones said. "This plan achieves good savings and further reduces the final maturity of debt, while preserving considerable flexibility for the district in the future to present no-tax-increase building proposals with voter approval."
Jones noted the refinancing move not only saves the district money, it also provides additional bonding capacity.
The Blair Oaks board has been strategizing ways to collect enough money to possibly build a fourth building, possibly a senior high for grades 9-12. Jones estimated such a structure would cost about $14 million.
Accruing enough bonding capacity - state law limits how much debt school districts can take on - has been a barrier for the fast-growing district.
Jones noted, based upon current financial conditions, the district would be able to raise $11.4 million if voters approved a five-cent increase in the debt service levy during the 2018 election.
"If we couldn't build the entire facility, we could at least be on our way to building a part of the whole," he said.
Jones said the board wants to let patrons of the school district decide, via a four-sevenths majority vote, what direction the district ought to go regarding major capital projects.
"That's one thing the board consistently has conversation about," he said.
He said the board hopes to engage the community to answer questions such as: What should the new building cost? When should it be built? How big should it be? And what grades should it span?
"It all starts with our student needs, and aligning them with the financial options available," he added. "Right now we're excited about the more than $2.49 million in savings. It puts us in a much better position."
It's possible, he said, that the community might approve two separate bond issues, instead of one larger request.
In 2005 district patrons approved a $2.5 million general obligation bond issue that didn't call for a tax increase. In 2007 the district approved a $5.2 million bond issue that raised the district's debt service levy by 30 cents.
That second hike raised enough money to build the middle school.
"Obviously, what we would like to do is put before voters a low- or no-tax increase to address future facility needs on our property east of the middle school," Jones said. "We want to do our best to expand our facilities and do it without a tax increase."
A five-cent increase would raise the debt service levy from 91 to 96 cents. Although state law permits the board to raise the debt service levy to $1.1872 if necessary, Jones said the board is determined to maintain the levy at the voter-approved level, currently 91 cents.
The district's operating levy for the schools is $2.75 per $100 of assessed valuation. The board is slated to establish next year's tax rates in August, but Jones doesn't expect any changes.
In other business on Tuesday, the Blair Oaks Board of Education appointed a former member, Jim Singer, to fill the vacant position previously held by Brad Spicer.
Spicer resigned because he and his family are relocating to Florida.
Singer will fill the position until the next regular election in April 2015.