Oran R-3 School District approves general obligation bond refunding with net savings of about $121,295

ORAN - At a regular meeting of the Oran R-III School District Board of Education on Feb. 18, a refunding bond resolution was approved.

The resolution authorized the sale of $1,275,000 General Obligation Refunding Bonds at an average interest rate of about 1.63 percent, compared to the Series 2011 Refunded Bonds which carry an average interest rate of about 3.52 percent. The District reduces the future interest expense by about $121,295, which was an improvement of $8,555 above the earlier projections. This $121,295 plus the approximate savings of $235,015 from two other refunding since 2011 means that the District has saved about $356,310 of interest expense, according to school officials.

Superintendent of Schools Mitchell Wood, expressed enthusiasm for the refunding option selected by the Board of Education. "This plan achieves good savings by preserving our present level of payments and shortens the final payment by one full year," Wood said.

Carla Graviett, Board president, pointed out that the $121,295 of interest savings for the Series 2015 refunding is not all the District may realize due to the Series 2015 Refunding Bonds having a call feature in March 1, 2018 at no penalty.

"If interest rates are lower in 2018 or later, we can take advantage of that. Meanwhile we are locking in these levels that are just about 1.9 percent lower than they were in 2011," said Graviett.

L.J. Hart and Company of St. Louis prepared the refunding proposal and explained how it can fit into the long-range plans of the District.

Courtney B. Wegman, vice president of the firm, mentioned that the three significant factors making the Series 2015 refunding possible were the lower interest rates than in 2011, the fact that the Series 2011 Bonds are subject to prepayment on March 1 at no penalty, and the District's ability to participate in Missouri's Direct Deposit Program. This program makes it possible for the District to receive an "AA+" rating from Standard and Poor's Corporation on the refunding bonds.

Wegman complimented Wood for his prompt and thorough preparations to supply the data necessary for the rating application and official statement, as well as the Board of Education for their foresight in making the Series 2011 Bonds callable in four years.

The Series 2015 Refunding Bonds were underwritten by L.J. Hart and Company and Wegman mentioned that the Bank of Advance acquired $150,000 of the bonds. The closing for the Series 2015 Refunding Bond issue occurred Feb. 265.

Several board members commended Wood and L.J. Hart and Company for developing the attractive refunding plan.

"It is nice to be able to save $121,295 of our taxpayers' money and boost our total savings to about $356,310. We also very much appreciated the support from the Bank of Advance," said Vance Todt, vice-president of the Board of Education.