Low interest rates allows St. Joseph schools to save money

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St. Joseph Post

Low interest rates have allowed the St. Joseph School Board to
make a move to save nearly two million dollars.

The St. Joseph School District is refinancing nearly $6.2 million
in General Obligation bonds first issued in 2014.

Assistant Superintendent of Business and Operations, Gabe
Edgar, says the district was able to get an interest rate below one percent,
because of its A-plus bond rating which it received due to a number of factors.

“A lot of it is driven by the economy,” Edgar tells host Barry
Birr on the KFEQ Hotline. “A lot of it is driven by the stability of the
businesses that you have here in town. There are a lot of businesses that are
stable, real stable, and so that helps out as well, because they are not going
to go anywhere.”

The St. Joseph School Board authorized the refinancing of the 2014
bonds used to build Carden Park and Oak Grove Elementary Schools. The drop from
4% to an average effective rate of .93% will save the district $1.7 million,
which is $121,354 more than the savings first projected.

Edgar says the timing couldn’t be better.

“That’s a lot of money,” Edgar says. “It’s good timing for us.
There were some things that happened at Central High School earlier this year
where we had some mold remediation, those types of things. So, it will go a
long way in helping us not to deficit spend.”

The St. Joseph School District had to close Central High
School at the beginning of the year after the Freshman building flooded, causing
widespread problems.

Edgar says the district has been making additional principle
payments on the bonds, called prepayments, which brings the total savings to more
than $4 million. It is a practice he likens to making extra principle payments
on your mortgage.

“So, if you have a principle (payment) of a thousand dollars
and you pay $3,000 that month, it’s going to go away quicker and you’re saving
that interest at the end,” Edgar says.

The district’s financial advisor, L. J. Hart and Company of
St. Louis, developed the refinancing plan. Edgar says the move clears more
space for the district to request voters allow it to issue additional bonds
without increasing taxes.