Spring Hill ISD has refinanced existing bonds to provide interest cost savings for the district.
Martin Cobb, the district’s Chief Financial Officer, said the round of refinancing saved the district $632,699 in interest costs.
“Over the years as the school has issued debt for improvements to build for construction and so forth, we’ve issued debt, and when that debt is issued, the school pays that debt back based on current rates at the time,” Cobb said. “So historically, as debt has been issued, that debt was issued with higher rates. Rates have recently come down and are at near historic lows.”
That gives the district the ability to refinance or issue new debt at a lower rate to pay off old debt incurred at a higher rate, he said. The move generates savings for the district.
“It’s a bond management program, so periodically, we review our outstanding debt, and as the debt is able to be refunded or refinanced, then we take advantage of that,” Cobb said.
The most recent refunding was for $2.9 million, Cobb said. It was issued at a rate of 4.75 percent, which was refinanced at 2.57 percent, leading to the $632,699 in savings.
Superintendent Wayne Guidry said he wants the bond council to look at a 10-year trajectory of growth and anticipate where the district will be. Doing so will help create a plan for any future construction.
“What you need is a 10-year strategic plan for bonds to go with your facilities plan so we can see at what point, one, what we have the finances to do for construction. And if that’s not in the near future, we need to plan accordingly or maintain our facilities accordingly,” he said. “So right now we have no long-term vision because we have no long-term plan.”
Overall, Guidry said refinancing put the district in an even better financial state.
“(The Texas Education Agency’s) minimum requirement is that you have three months of operating expenditures for your fund balance,” he said. “I think even after doing some projects, we’re projected at being at 4 1/2 months, so that’s just how good of shape the district is in.”