The Board of Education was initially made aware of the refunding opportunity at a special workshop held on July 13, 2011 and diligently kept abreast of the market improvements since that time. In July the projected savings were about $428,592 for the same principal advance refunding plan with $99,711 estimate of negative arbitrage between the settlement date for the refunding and the call date of March 1, 2012. The August 22, 2011 update illustrated a net savings of $681,419 with $56,951 negative arbitrage in the escrow account. The further market improvement at the September 14, 2011 meeting after changing the preferred option to a modified plan that produced $1,020,853 of net interest savings and reduced the negative arbitrage to $51,975 was so appealing that the Board of Education and Mr. Stauffacher decided to capture the “bird in the hand” now and avoid the risk of interest rates increasing between now and December. An increase in rates of less than one tenth of one percent would defeat any benefit from further delay.
The District’s municipal bond underwriter, L. J. Hart & Company of St. Louis, Missouri prepared the refunding proposal and Mr. Stauffacher explained how it can fit into the long range plans of the District. It should be pointed out that the $1,020,853 of interest savings for the Series 2011 refunding is not all the District may realize due to the Series 2011 Refunding Bonds having a call feature in 2016 at no penalty. The District is again participating 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 Corporation on the refunding bonds.
The closing for the refunding bonds is to occur on October 20, 2011. It is nice to be able to save $1,020,853 of our taxpayers’ money and still possess considerable flexibility for future needs without a debt service levy increase.
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