GREENVILLE – Greenville Public Schools has taken advantage of low interest rates and refinanced some of the construction bonds, resulting in district residents paying a lower tax rate sooner than planned.
Director of Finance John Gilchrist has been working with the bonding counsel and the school board to authorize the refinancing of some of the past construction bonds.
“We have watched as taxable values in our community have dropped — about $80 million in the last few years — which threatened to extend our tax levies/tax rates for construction debt repayment,” said Superintendent Pete Haines. “Not only has he been able to construct a financing plan that removes that threat, with lower interested rates and our good credit rating, he has been able to negotiate a plan that will actually lower taxes for Greenville Public Schools residents sooner than projected in our bond campaign.”
Haines said the tax rates are set to drop after this year.
Gilchrist said it was important to refinance the bonds because the district needed to be proactive about its debt on be on the lookout for ways to cut financing costs.
“Our taxpayers have graciously supported our infrastructure needs over the years in particular with the recent 2011 bond,” Gilchrist said. “We have to return the favor whenever we can and this is a great way to do it.”
Over the life of the bonds, it is saving 37 percent in interest or $444,275.
Rather than paying once a year in May on the debt, Gilchrist said Greenville is paying twice a year reducing the amount of accrued interest the fund charges.
For 19 years, Greenville has been in the School Loan Revolving Fund, and, because of what it charges in interest and what the school earns at the bank, there is little reason to hold funds once the school knows it can make the required principal and interest payments on the bonds.
“The excess is put towards the required repayment,” he said. “This approach has helped protect us from the relatively flat change in taxable value we have seen the last three years.”
Currently, Gilchrist said residents are paying 7 mills for Greenville debt millage — 1 mill for every $1,000 in taxable value, which is the rate mandated by the School Loan Revolving Fund.
When voters approved the most recent bond in 2011, Gilchrist said the average taxable value in Greenville was $38,000, which means residents are currently paying about $266 a year to repay the debt.
“If things stayed right where they are, we could see a reduction of 0.40 mills in 2014, which is about a $15 savings to the average home,” Gilchrist said. “It is important to view these savings over the long term and a lot can happen to change them, particularly changes in taxable value.”