The Ouachita Parish School Board signed off last week on the process of issuing up to $6.25 million in refunded bonds to realize between $600,000 to $700,000 in interest savings.
The School Board acted on the matter during its regular meeting on Sept. 8.
Grant Schlueter, an attorney with the New Orleans law firm Foley & Judell, said the bonded indebtedness up for refinancing was from a series originally issued in 2011 for the East Ouachita School District.
Refunded bonds refer to the process of refinancing old bonded indebtedness by issuing new bonded indebtedness, hopefully at a lower interest rate to generate savings. In other words, the refunded bonds do not produce any additional revenues for the School Board but reduce the burden on taxpayers.
“They can be refinanced at a significantly lower rate of interest now,” said Schlueter, who serves as the board’s bond legal counsel. “Savings are projected to be more than $600,000.”
Schlueter noted the bonded indebtedness would not be extended.
“It’s simply refinancing at a lower interest rate, reducing the amount that taxpayers are paying each and every year on the outstanding 2011 issue,” Schlueter said. “The savings are significantly higher than the state Bond Commission’s guidelines for refinancings of this type.”
On another front, the School Board took up a separate bond matter, agreeing to incur $24 million in bonded indebtedness for the East Ouachita School District to build, expand, renovate and maintain school facilities.
Last month, eastern Ouachita Parish voters approved the incurrence of up to $42 million in bonded indebtedness.
Instead of incurring the full amount of $42 million at one time, the School Board plans to incur the debt in two separate issues of $24 million this year and $18 million when the board is prepared to spend proceeds from the second issue.
“We anticipate delivery and having money in the bank on November 5,” Schlueter said. “We anticipate a second issue, that would be the balance of what was authorized by voters. The timing on that is uncertain because it will be dictated by the needs of the district.”
The $24 million in bonded indebtedness will pay for the construction of a new Sterlington Middle School as well as a handful of other projects.
Speaking of the new middle school, School Board member Greg Manley said, “This is a project we’ve been working on for about 18 months.”
Manley said each school in the eastern Ouachita Parish school district would receive a portion of the bond proceeds based on the needs outlined by each school’s principal.
“We’re looking at the larger projects first, such as the Sterlington Middle School, a football complex at East Ouachita, a multipurpose and classrooms to house the ROTC at Richwood High School,” said Superintendent Don Coker.
Coker pointed out the School Board had three years to spend up to 85 percent of the bond proceeds.
“We don’t think we’ll have any problem spending all of it,” he said.
School Board member Harold McCoy pointed out the Sterlington Middle School project would receive about $18 million of the initial $24-million bond issue.