ONTARIO, Ohio–The Ontario Board of Education approved refinancing $8,695,000 in bonds at Tuesday night’s board meeting, which is estimated to save district taxpayers about $831,000, if interest rates are to stay the same.
Robert W. Baird and Company will serve as the underwriter of the bonds. Michael Burns, director at Robert W. Baird and Company, said, “As we refinance these bonds, essentially what we’re going to do, assuming rates stay level and low for us, we’ll be able to reduce the millage rates of the taxpayer.”
The millage reduction to the taxpayers would be .38 mills.
The bonds were originally issued in 1998 and then refinanced in 2005. “Back in 2005, the district saved the taxpayers cash savings of about $850,000,” Burns noted.
“The call date on the 2005 bonds is Dec. 1, 2015. We can do a current refinancing of those bonds as early as Sept. 3, 2015. The reason why we’re thinking about doing this is we’re going to generate interest savings to the district and millage reduction to the taxpayers,” he explained.
He anticipates the bond rating to be higher than an A-. “We’re looking at hopefully a AA- [rating], which is three notches above where you were originally,” he said.
He said he’ll work with the school over the next few months to determine what’s best for the school in terms of pricing the bonds.
“If you price the bonds early, such as in April, and then not close until Sept. 3 that’s what you call extended close option, and we can do that, but because you’re making investors commit to buy your bonds early at an interest rate, the investors take an interest rate risk,” he said.
In other news, during his finances report, Treasurer Randy Harvey said that the school has underspent the budget by $154,000. “It’s going to be real close this year. We’ve had some illnesses, so we got some extra subs. And we’ve had some mid-year retirements that weren’t anticipated, so we have severance pay and things that are going into this year that I didn’t expect until next year,” he said.
However, he said, “With those retirements, if we’re up this year, you’ll see that in a five-year forecast it’s actually to our advantage. Short-term, it may look like we’re behind budget, but it’s actually an advantage in the long-term.”
He also discussed the state proposed budget from the governor and what it means for Ontario Schools. “We actually do well under the new formula,” he said. He said the school should receive $3.3 million more than it receives this year. “Unfortunately, the state won’t give it to us,” he said.
“They put in a cap, and they cap it at 10 percent. So under the budget, we would actually get about a $261,000 increase with the formula in the first year and about a $280,000 increase the second year.”
While that sounds good, he said, the school relies heavily on tangible personal property hold harmless payments from the state. He said the state wants to eliminate those payments, which creates an issue because “those funds are over $1.4 million of our budget right now.”
“In the one hand they’re giving us money through the formula, and now they’re going to start cutting us in the tangible personal property hold harmless funds,” he said.
“We need to flood our legislature, representatives, senators over the next several weeks and months on this process that they need to leave the tangible personal property hold harmless payments alone.”
