Last night, the EISD Board of Trustees met in called session. The special meeting was devoted to hearing from our long time bond advisor, Doug Whitt. Mr. Whitt presented the board with information regarding the refinancing of EISD voter approved bonds. Mr. Whitt presented information on the the current bond market, recent Texas school bond sales, historical statistics, EISD’s current bond debt service, and an analysis of refunding bonds specific to EISD.
Mr.Whitt then presented the board with three different scenarios for refunding EISD bonds. The first scenario was based on an advanced refunding of current bonds. In this scenario, the district could realize a savings of up to $897,000 in debt services. In the second scenario, the bonds were refunded on the call date of 2015. Based on current interest rates, this scenario could produce a savings of up to $1,485,000 for the district in debt service. It was pointed out that while this scenario provides a greater savings to the district, it is also dependent on interest rates staying at or near current levels. The third scenario was similar to the second. The bonds were refunded at the call date in 2015 with the interest rate increasing by 0.82%. In this scenario, the district would still realize a savings of almost $900,000.
Mr. Whitt pointed out that because the district has a fund balance in our I & S account, that another scenario was available for consideration. In this scenario, the district would use $450,000 of its I & S fund balance as a cash contribution to pay down on the balance of the bonds and do an advance refund based on current interest rates. In this case, the potential savings to the district would be almost $1,900,000 in debt service. Further, the refunded bonds would be paid off three years earlier than the original maturity date. The overall bond payment for the district will not change dramatically from what it is paying now (about $1,070,000). Since the bond payment will not change much, the expected I & S rate will not be affected, either. The big difference is the fact that the bonds will be paid off early.
The board voted to proceed with the plan of utilizing $450,000 of our I & S fund balance and an advance refund to provide the most benefit to the district and to the taxpayers. Over the next several weeks, the process of the refunding will begin.