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LPS keeps watchful eye on bonds, saving taxpayers $2.36 million
Lincoln Public Schools recently saved $2.36 million dollars by refinancing general obligation bonds originally sold to help fund Lincoln Southwest and Lincoln North Star high schools.
The $22.7 million in bonds were first issued in 2002 at a 4.92 percent interest rate – and this past January, the refinancing of $13.6 million of those bonds came at an average interest rate of 1.55 percent.
Thanks to strong financial leadership in LPS, partnered with a stable and diverse local economy, the school district carefully has watched their bond issues with an eye toward saving taxpayer money, according to Scott Keene, the financial advisor for LPS, and vice president and managing director of Ameritas Investment Corp.
“The school district quietly and constantly watches over these bonds,” Keene said. “As a parent and taxpayer of the school district, I appreciate all of the steps the Lincoln Board of Education takes to save money and still provide top-notch facilities for our kids.”
The low borrowing rate for this kind of refinancing is directly related to the strong credit ratings of the school district – ratings that are at the very top of their categories: AAA from Standard & Poor's and Aaa from Moody's. “Investors are scrambling for strong, quality credits and Lincoln Public Schools bonds absolutely fit the bill,” Keene explained.
The nation’s two premiere financial rating firms base their credit ratings on a wide variety of factors including: a school district’s thoughtful budgeting process, debt and financial policies and procedures, conservative fiscal management goals (including maintaining appropriate cash balances), as well as the general economic strength of a community and state, the diversification of the tax base and the wealth of the region.
“A major priority for the school district and Lincoln Board of Education is to prudently and consistently monitor our funds in the best interest of community taxpayers," said Richard Meginnis, chair of the Board of Education's Finance Committee.
He added: "I am impressed with the LPS staff for their vigilance in honoring that responsibility.”
Jill Pauley, director of Fiscal Services for LPS, continued: “The district takes great pride in saving the community money whenever possible. Our outstanding bond ratings are something we strive for because it allows the district to get the best pricing, which lowers the cost to our taxpayers.”
Keene noted that three years ago LPS saved the community almost $4 million by refinancing the first series of the original high school bond issue. At that time, $41.2 million from the first $67 million of bonds – issued at an interest rate of 5.2 percent in 2000– were refinanced at an interest rate of 2.56 percent.
That adds up to a total present value savings of about $6.4 million, Keene said, pointing to what he called the “conservative nature of the school district, exemplified in constant financial vigilance to lower the debt service payments so dramatically.”
For more information contact Mark Shepard, associate superintendent for Business Affairs at LPS. 436-1635.
Published: March 5, 2012
Updated: May 25, 2012