The Altoona Area School District is hoping to save $1.65 million by refinancing its debt.
The school board voted Monday to issue $50 million in new general obligation bonds, which will pay a lower interest rate, and pull the bonds it sold in 2008 off the market.
John McShane, Boenning and Scattergood managing director and investment banker for the district, told the board on Monday, "2008 was a low point in the marketplace. But we've seen those rates go lower."
It's estimated that the district can reduce its interest cost from 4.36 percent to 3.05 percent on general obligation bonds.
The district can achieve a net savings of $1.65 million over a five-year period based on current market conditions, McShane said.
Those potential savings could possibly increase if the board can win a bond rating from Moody's Corp., enabling the district's bonds to be marketed to buyers. The new bonds will be callable in seven to 10 years, McShane said.
"You have a healthy fund balance. We think the board has done a great job of putting the district in a position to be one of the few school districts with a chance to be upgraded when we approach the rating industries." McShane said. "Most school districts and communities are being downgraded," he added, noting the city's entrance to to the state's distressed municipalities program has put Altoona on "downgrade watch."
Superintendent Dennis Murray is scheduled for a meeting with Moody's this week about receiving a rating.
"The district is fiscally solvent," Murray said. "Getting a rating is about fiscal solvency."
But the district's solvency could be damaged by the state's Public School Employees' Retirement System, which is leeching money from the district's fund balance.
"One concern is our retirement fund and the fact that our rate keeps increasing," Murray said.
