WHEATON – Community Unit School District 200 hopes to refinance its $224.8 million debt obligation in 2015 to avoid escalating payments that would top out at $29.4 million in 2022.
With its current debt structure, the district would pay more than $20 million a year from 2016 through 2022.
By starting the refinancing process next year, the district can limit payments to less than $20 million for every year except fiscal years 2019 and 2020, saving about $4.9 million in total debt service, assuming interest rates stay relatively constant.
That savings could help offset the $10 million in bonds the district may issue to pay for facility improvements, which total about $13 million with interest, said Assistant Superintendent of Business Operations Bill Farley.
The plan would be carried out in four steps during 2015, 2016, 2018 and 2019, with the Board of Education refinancing portions of the debt each of those years a few months before the bonds are callable, according to Farley. By paying back part of the bonds early, the district can avoid paying some of the interest on them. At a Jan. 8 board meeting, Superintendent Brian Harris said the board looked at the escalation of debt payments a few years ago.
“We knew we were going to have to do something in our debt structure,” Harris said. “There are two things here: We can capture some new dollars and fix some immediate critical needs – safety and security needs in our buildings – as well as restructure our debt over a four to five year period.”
If all the restructuring was done today, said Robert Lewis, of district finance consultant PMA, the debt service would increase by nearly $15.2 million because many of the bonds haven’t reached their call date yet.
“It would be very nice if we could change the picture to this year, so you can go and say ‘Look, we leveled off the debt service,’” he said. “But it would be much more costly to do that versus waiting.”
Farley said the Board Finance Committee is reviewing language for a resolution expressing the board’s desire to commit to restructuring its debt along the lines of the presented plan.