Property owners within the Merced City School District are likely to realize substantial savings on their tax bills as Measure S bonds issued 10 years ago are refinanced in the months ahead.
Board of Education members Tuesday night unanimously approved a request to hire a team of consultants to refinance the $26.5 million bond; savings of $730,000 are expected from the move, Greg Spicer, the district's associate superintendent for administrative services, said.
Spicer is not sure how much the reduced bond savings payments will mean to individual taxpayers. He said the expected net savings could be significant and even higher if historically low rates are even better than anticipated.
"It's worth doing," Spicer said.
Board President Adam Cox said the bond refinancing will be good for taxpayers, with an $800,000 savings possible. Board member Susan Walsh said she is delighted with the savings prospects from the bond refinancing.
Board member Gene Stamm said sales could take place in April and May once consultants are hired.
"It ain't cheap," Stamm said, "but it's something we have to do. People want to get paid."
Superintendent RoseMary Parga Duran said refinancing prospects show the district is being a good steward of the Measure S bond monies.
"I'm excited; that will be great for us," Duran said. "We can save taxpayers a considerable amount and that's important. Everybody wins on that."
While refinancing will reduce the amount of property taxes, it won't increase the term of the outstanding bonds, due to run another 10 years.
On an unrelated front, however, the district must continue purchasing short-term tax anticipation notes up to $10 million since the state is deferring payment on 40 percent of what it owes local schools.
Spicer said the district has used tax anticipation notes for four years and been charged about $200,000 a year for the loans through the California School Cash Reserve Program, sponsored by the California School Boards Association Finance Corp.
This is the 26th year of the association's program. In the current fiscal year, more than 200 California school districts, county offices of education and community colleges have borrowed $1.5 billion.
"It's just the way it is because of the deferrals," Spicer said. "This allows some flexibility. The net interest is about $200,000 each year."
Walsh said it would be nice if the Legislature would give the district back the money it has paid in interest because of funding deferrals. Even with passage of Proposition 30 in November and increased school funding promised, the state revenue deferrals will be delayed but not eliminated.
"While it's low interest, it's not free money," Walsh said. "We've had to do it for years."
Duran said the school district is not out of the woods financially. The tax anticipation notes are just part of doing business now.
Reporter Doane Yawger can be reached at (209) 385-2407 or email@example.com.