Northwood schools refinance debt, saves over $3 million

        Northwood Local Schools has taken advantage of historically low interest rates in the bond market and embarked on an aggressive bond refunding campaign. The district has refunded a portion of its eligible debt through two refunding bond issues. 
        The refunding process, like refinancing a home loan to take advantage of lower interest rates, will save Northwood’s taxpayers a total of $3,276,147 over the remaining life of the bonds. The savings will come to taxpayers in the form of reduced property taxes resulting from shortening the life of the voted bonds by four years, as well as savings to the district’s General Fund. Originally, voters authorized the bonds for a term of 37 years. Because of the lower interest rates, the bonds will now be paid off in 33 years from the original borrowing date.
        The district’s most recent effort was completed this month when they issued $13,365,000 of refunding bonds to refinance its two 2014 bond issues.
        The bond issues, according to Superintendent Jason Kozina, funded the construction of the new school building, which were approved by voters in May of 2014.
       
Reduce taxes
        Those bonds had interest rates of 4.05% and 3.50%. The new bonds have interest rates of 2.65% and 2.25%, respectively. A combination of low interest rates, an excellent credit rating (score), and good market timing allowed the district to save more than $3,275,000 in interest cost.
        “The board felt that refinancing the bonds to save taxpayer dollars was an easy decision,” said Treasurer Angel Adamski.
        The overall savings was well beyond the district’s initial expectations. Many school districts target a savings of at least 3% percent of the amount to be refinanced. Combined, the transactions saved three times the benchmark.
        “There are so few ways to reduce taxes in our community that refinancing bonds when possible is a major benefit to our residents,” said Kozina. “The school board and administration are very aware that we must continue to control costs and we are always looking at opportunities to save and be good stewards of our taxpayer’s money.”
       
Future refinancing
        The district is now looking ahead to additional refinancing options.
        “We have several series of bonds. And we only refinanced the series that were showing enough gain,” said Kozina. “There are other bonds we still have that we did not yet refinance because they were not showing enough return. So we’re going to continue watching the market. There are a few other sets of bonds we could potentially look at if they start to show better returns.”
 
This article is comprised of a press release and information from News Editor Kelly Kaczala’s interview with Superintendent Jason Kozina.