Submitted by the Grossmont Union High School District
(GUHSD) announced a savings of $4.9 million for taxpayers over the next 11 years by refinancing , which fund repairs of aging schools in the district and other projects.
The GUHSD board during its April 19 meeting.
This is the second time the district has reduced the cost of financing the Proposition H bond program for the district’s taxpayers. In October 2011, GUHSD refunded $20.9 million of its Series 2004 bonds and saved $1.3 million in financing costs. Between the two transactions, the district achieved a combined savings of $6.2 million for district taxpayers.
“We are pleased to report that this funding was extremely successful and significantly surpasses the savings targets we had set prior to the sale,” said Deputy Superintendent Scott Patterson.
In March 2004, 62 percent of voters approved Proposition H, a $274 million program to fund repairs of aging schools in the district and the construction of a new school. With state school facility program dollars, the Proposition H program totals $327 million. Nearly $322 million has been expended to date.
Proposition U is an additional $417 million General Obligation Bond Measure passed by voters in November 2008. When combined with projected state funding, the estimated program budget is $601.7 million. The program substantially completes the modernization of district schools, providing classrooms and equipment for Career Technical Education, multi-purpose facilities that support the superintendent’s vision for the arts in education, and the construction of a new high school in the Alpine/Blossom Valley area. Nearly $140 million in Prop U funds are expended to date.
Refunding bonds are used to refinance certain Series 2006 bonds (known as “prior bonds”) that have higher interest rates than the refunding bonds. The proceeds from the sale of the refunding bonds are kept in an interest-bearing escrow account until each prior bond’s maturity or redemption date. The monies in the escrow account are used to pay off the prior bonds, along with related interest and redemption costs. The refunding bonds will be serviced using the same property tax payments initially used to pay the prior bonds, but at a reduced overall cost.
Following is a summary of the transaction that was executed on May 2:
• Total amount of bonds refunded: $54,515,000
• True interest cost: 2.08 percent
• Net present value of savings: $4,306,112
• Savings as % of refunded bonds: 7.75 percent