The South Middleton School Board may consider refinancing almost $10 million in 2014 bonds for a target savings of at least $100,000 in lower interest payments.
A bond resolution could come up for a vote as early as the March 18 meeting scheduled for 7 p.m. in the board room of the district administrative wing at the Iron Forge Elementary School.
If approved, the resolution would enable district administrators and financial consultants to process the paperwork to prepare the bonds for refinancing at a rate lower than the current 3.25 percent. The board would need to approve a separate follow-up motion to execute the refinancing of the bonds.
Current market trends suggest the district could obtain an interest rate of about 2.88 percent on 2014 bonds to yield a savings of around $197,000, said Brad Remig, managing director of Public Financial Management Inc. of Harrisburg. But he cautioned that a lot could happen between now and June 1, the earliest the board could vote on the follow-up motion on bonds that are eligible for refinancing starting Sept. 1.
Board members Monday agreed to put the resolution on the March 18 agenda with language that sets the minimum target savings at $100,000. They also leaned toward approval of a cash-out option that would allow the district to receive the savings as one lump sum rather than as gradual payments made over several fiscal years.
The district has plans for capital improvement projects that could use money from savings sooner than later, Remig said. He added that for South Middleton to proceed with the refinancing, it would need to commit about $10,000 upfront for fees and a credit rating analysis.
The 2014 bonds were used toward the renovation and expansion of the Iron Forge Elementary School.