Clover Park Refinances 2006 Bonds; Saves Taxpayers $5 Million

As a result of historically low interest rates, careful monitoring of bond market conditions and good financial management, taxpayers in Clover Park School District will pay less for school construction bonds approved in 2006.

In February 2006, voters approved a $65 million school construction bond proposal to build a new Lakeview Hope Academy and Lakes High School. Both school construction projects are finished and students and staff are thriving in their new schools.

Like a home mortgage, school construction bonds are paid for by taxpayers over a long period of time (20 -30 years) and can be refunded (similar to refinancing). By refunding the bonds, the district pays less over time and ultimately collects less from taxpayers.

Last May, the Clover Park School District Board of Directors appointed superintendent Debbie LeBeau as the district’s designated representative to approve the final terms of the sale and issuance of bonds, which provided more flexibility for district administrators to take advantage of the interest rates in the current market.

In December, district administrators and school board president Carole Jacobs, participated in a conference call with Moody's Investors Service representatives, who provide credit ratings and research covering debt instruments and securities. As a result of the meeting and the district’s healthy fund balance and stable finances, Clover Park School District received an Aa1 enhanced rating.

Because of the district’s good bond rating, the district was able to “refund,” or refinance the 2006 bonds and save taxpayers $5 million over the life of the bonds.

“Bonds can be refunded only once during the life of the bonds,” said Lynn Wilson, administrator for business services and capital projects. “Board members approved a resolution for refunding of the bonds at a 5 percent* minimum savings. Working with our financial advisors and watching the markets, we were able to achieve an 8.6 percent savings.

“We exceeded our savings target,” Wilson said. “And, we are keeping our promise to voters by being good stewards of our resources.”

*Net present value.

-Clover Park School District