BANGS — Members of the board of trustees of the Bangs Independent School District are studying whether to refinance existing bonded debt in the near future and save taxpayers more than $1 million, or to wait two years and perhaps save them even more — $1.7 million.
However, waiting for greater savings comes with a big “if” — if interest rates don’t rise significantly.
Robert White, representing Southwest Securities, made a presentation to the school board Monday night which included options available to the school district on bonds issued in 2004.
“Refinancing is a very popular item in this economy,” White told the board, pointing to continued low interest rates.
The call date for the Bangs school bonds, which is not until 2014, could be tapped now through an advance refunding option, which would save taxpayers $1,050,000. The procedure requires an escrow account for payments until the call date.
Another option would be to wait in the October 2014 call date to refinance, and if interest rates do not climb significantly, Bangs ISD taxpayers could save as much as $1.7 million over the life of the debt, White said.
The district could also set a target amount of savings between the two amounts, White said, and Southwest Securities would notify the district when the timing was right to lock in that amount through refinancing. The board would approve a target amount and authorize Superintendent Bill Foster to initiate the refinancing when the time arrives, avoiding the delay of convening a board meeting. Even so, White said it would take approximately 30 days from the time the refinancing is initiated to the time the new rates take effect.
White said costs related to the refinancing, whether now or in the future, were already figured into the net savings for the debt expense.
Foster asked White which option is best, and White said that’s a decision for the school board based on the information Southwest Securities provides.
“It’s hard to beat the rates,” Foster said.
White said refinancing could lower the tax rate on bonded indebtedness paid by taxpayers by about 1.5 cents per $100 valuation.
“It doesn’t save the district money,” Foster said. “It would be done to help those taxpayers out there paying the tax rates.”
White said interest rates for such bonds have been volatile in recent months, but are now hovering just above the 20-year low of 3.60 percent at 3.64 percent.
In a separate matter, White also provided the district with information on borrowing money in amounts ranging from $200,000 to $1.2 million in $200,000 increments, with various repayment time periods.
Foster said White’s presentation was posted as an information item on Monday night’s agenda, so no action could be taken. He asked board members to consider options before the November board meeting, and in the interim any additional questions of White would be sent to him.
In other business, the trustees:
• Approved budget amendments to provide funding, and then approved the purchase of several large band instruments like timpani, tubas and bass drums as growing numbers of students at the elementary school levels are showing interest in playing instruments that Foster said are not easily affordable by parents. New instruments will be assigned to the high school, and existing ones will be placed at the middle and elementary campuses. Foster also said plans for the purchase of a new band trailer, initially scheduled for spring 2013, were expedited after leaks that caused some damage to instruments were identified during the trip to Grape Creek football game. Prices for signage on the trailer are being explored.
• Heard Foster report on an Oct. 11 Commissioners Cabinet meeting with TEA Commissioner Michael Williams at which several topics were discussed, including the state’s plans to seek a waiver for the federal No Child Left Behind mandates, accountability requirements, and school choice/vouchers. Foster said Williams has stated he is pro-voucher and charter schools, but he told superintendents that this is a decision for the state legislature. “I hope the commissioner will support public schools,” Foster said.
Foster said a key item at the cabinet meeting was asking the state to recognize that many students are not good candidates for a four-year college even though high school curriculum generally prepares students for that. Many students would be better served to be prepared to attend a trade school or two-year college, he said, or simply be trained to begin a career at high school graduation. Foster said subjects like animal science should be acceptable substitutes for some of the traditional math and science courses now required. A committee has been formed to represent Education Service Center Region XV, which includes a vast region around San Angelo, so one communication to the TEA can be sent, rather than dozens from individual school districts.
• Heard Foster report that the district had only two areas that weren’t perfect in the Financial Integrity Rating System of Texas, and those involved the amount of bonded debt per student, which was affected by a decline in enrollment, and the rate of property tax collections, which was below 98 percent.