The Orono School Board refinanced three sets of bonds, which will save taxpayers $6.2 million. The sale was unanimously approved in a special meeting July 7.
As a result, the board will be able to reduce the amount it levies annually for debt service purposes and is committed to passing those savings on to taxpayers.
The district, which has earned one of the highest possible bond ratings, received seven bids to refinance $36,450,000 in outstanding debt. The new interest rate was estimated to be 2.09 percent; the actual rate in the winning bid was 1.59 percent. As a result, savings jumped 32 percent from an estimated $4.7 million to an actual $6.2 million.
“These are great results and great bids,” Greg Crowe told the board. He is a senior municipal adviser for Ehlers, the district’s financial consultant.
The board’s Finance and Facilities Subcommittee carefully studied the possibility of refinancing the bonds for months given recent favorable interest rates. The original bonds were issued to cover the costs of constructing Orono Middle School and renovating Orono Schumann Elementary, Orono Intermediate School and Orono High School.
“The value of ‘stewardship’ in our Strategic Plan is there because that’s always our goal – every single day – to demonstrate accountability through responsible planning and use of resources,” said Board Chair Bob Tunheim.
“Refinancing these bonds is a significant example of how seriously we take the public’s trust in us,” he added, “but there are many smaller steps we have taken, as well, that contribute positively to our bottom line.”
The transaction also highlighted the financial community’s faith in the fiscal responsibility of the district with a very favorable bond rating. Moody’s Investor Service granted the district an underlying rating of Aa2. The Aa2 rating, according to Moody’s, reflects the district’s tax base, stable enrollment, strong financial operations with sound General Fund reserves and average debt and pension liabilities.