BAY MINETTE – Ongoing fluctuations in bond markets could save the Baldwin County Public School System at least $3.5 million under a plan discussed Tuesday by the County Commission and education officials.
The Baldwin County Commission is scheduled to vote Tuesday on a proposal to allow the Board of Education to refinance two bond series. John Wilson, school system finance director, said drops in the stock market have caused the interest rates on bonds to also fall.
“The financial market -- to say it’s probably volatile is an understatement,” Wilson told commissioners during a work session. “We were looking at doing at the refinance earlier in the year but based on the massive drops in the last two weeks, it makes absolute sense to jump on this right now.”
He said the interest rate on a 2012 bond has dropped from 4.1 percent to 2.1 percent. The rate for a 2015 bond series is down from 5 to 2.5 percent.
“We’re looking at $3.5 million or more in interest savings, without extending the maturity of the bond or anything of that nature,” Wilson said.
He said those estimates were made Friday and the actual savings could be more.
“It doesn’t count what people are referring to as ‘Black Monday 2.0’ that happened yesterday,” Wilson said. “To say the rates are moving around is an understatement.”
Ron Cink, budget director for the County Commission, said that while the bonds were issued for the school board, the commission is the authority overseeing the taxes securing the bonds, so commissioner must approve the refinancing.
Commissioners said Tuesday that they would place in proposal on the consent agenda.
Principal on the 2012 bond series was almost $19.39 million, while the loan amount for the 2015 series was almost $38.59 million, according to school system reports. The 2012 series has 10 years remaining before it is paid off. The 2015 series is scheduled to be paid in 12 years.
