Bond Refinancing to Save Birmingham Schools $19 Million
By selling the district's 2013 Refunding Bonds, Birmingham Public Schools will pay millions less in interest — a savings that will be passed onto taxpayers, officials say.
A recent refinancing move by Birmingham Public Schools means district residents will see smaller tax bills in upcoming years.
At the Tuesday meeting of the Birmingham Board of Education, Superintendent Daniel Nerad announced that the district recently sold its 2013 Refunding Bonds for $112 million.
According to Nerad, the move will save the district $19.5 million in interest payments over the next 21 yearrs — meaning that the district's millage rates will go down and Birmingham taxpayers will see smaller bills as well.
Refunding a bond is the same as refinancing, Assistant Superintendent for Business Services Debbie Piesz said. Selling the refunding bonds, she said, is similiar to refinancing a house.
"It's important to note that the Board of Education saw this potential refunding as an opportunity to save our taxpayers money, and the district's financial leadership has allowed for such a successful outcome," Nerad said.
According to Piesz, the bonds being refunded include the 2004 Building and Site Fund Bond, passed by voters to pay for major building renovations and repairs, including renovations of the high school pools and gymnasiums.
Chief among the reasons for the successful refunding, Nerad said, was the district's high credit rating; the district has been rated "Aaa" and "AA+" by Moody's Investors Service and Standard and Poor, respectively.
According to Nerad, both rating services cited the district's strong economic characteristics, stable enrollment and strong income levels as reasons for the high rating.
The Refunding Bonds were sold on the open market at a high true interest rate, Piesz said, a testament to the district's strong economic reputation.
"More people want to buy our bonds than there were bonds available," Piesz said. "As a savings and transaction, it really speaks highly of the status of the school district."
"Birmingham Public Schools bonds were well received by the bond market," added Brenda Voutyras, managing director with the investment firm Stifel Nicolaus.
"We saw a high level of demand and were able to take advantage of historic low interest rates that produced a very nice level of savings that will be passed onto its taxpayers," Voutyras said.