VWCS bond refunding saves $2.6 million

VW independent/submitted information

A recent refinancing of its construction bonds has resulted in a savings of $2.6 million for the Van Wert City School District.

The district took advantage of historically low interest rates in the bond market and recently secured a financing of its 2006 and 2007 school construction bonds. According to Treasurer Mike Ruen, the original bonds were approved in 2001 and issued to construct the high school-middle school complex.

“The refunding process, like refinancing a home loan to take advantage of lower interest rates, will save taxpayers a total of $2,643,861 over the remaining life of the bonds,” Ruen said, adding that the savings will come to taxpayers in the form of reduced millage collected annually to pay back the voted bond issues.

Ruen said the savings would not affect the operating budget of the district, since construction bonds are not part of the operating budget.

The treasurer began working with municipal advisor Rockmill Financial Consulting earlier this year to oversee the refunding and to think strategically about how to maximize taxpayer savings. A combination of low interest rates, the district’s excellent credit rating, and good market timing allowed the district to save more than expected in interest costs.

“The board felt that refinancing its bonds to save taxpayer dollars was an easy decision,” said Van Wert City Board of Education President R.J. Coleman.

The overall savings, though, was well beyond initial expectations, Ruen noted.

“Many school districts target a savings of at least 3 percent of the amount to be refinanced,” the treasurer explained. “In Van Wert’s case, this year’s refunding issue saved 13.47 percent.”

“Having a municipal advisor and treasurer working together allowed the district to maximize savings,” said Board member Anthony Adams, who worked closely with the refunding process.

Ruen said the old bond issue had an average interest rate of 4.18 percent, while the refinanced bonds have an average interest rate of 2.28 percent.

“We are always looking at opportunities to save as much money as possible, and strive to be good stewards of our taxpayers’ dollars,” the treasurer added.

For more information, contact Ruen at 419.238.5432.