On Friday, the Canutillo Independent School District announced a refinancing of the $16.6 million in bond debt to save taxpayers $3.4 million in interest payments over the past 18 months.
Similar to refinancing a mortgage, CISD took advantage of low rates to restructure its existing debt by refinancing $8,075,000 in 2015 and $8,645,000 as of Wednesday, January 13th. CISD’s new rate of 2.7 percent is more favorable than the previous 4 percent rate, a testament to the District’s bond credit rating of AA-. Each refunding saved CISD over 15 percent on a net present value basis.
“CISD’s goal to reduce our debt service payments and maximize our financial standing to provide maximum value to our students, staff and taxpayers,” said Dr. Galaviz, Superintendent of Canutillo ISD. “As careful stewards of our resources, CISD is positioning itself as a district of choice.”
CISD, together with its financial adviser, Estrada Hinojosa & Co. Inc., developed a plan to maintain debt service payments for the next seven years at approximately $7 million per year.
CISD accomplished this goal through the two successful refundings. In 2013, Canutillo ISD voters approved a bond referendum that called for an Interest & Sinking (I&S, or “debt”) tax rate of $0.41 per $100 of valuation. Through sound financial management and leadership, however, CISD will maintain an I&S tax rate of $0.36 for the next seven years.
The pricing of CISD’s second $8 million-plus bond Wednesday occurred the day before the Federal Reserve increased interest rates yesterday. In addition, CISD took advantage of Bank Qualified rates, which were extremely low at the time of these financings.
“CISD ensured these refundings occurred at the appropriate time to secure low interest rates to save our taxpayers as much money as possible,” said Stephanie Frietze, Board President for Canutillo ISD. “Every dollar we save is another dollar we can invest into the education of our children.”
Moving forward, Canutillo ISD will await the recommendations of the Facilities Master Plan to understand the future financing needs for the district pertaining to its physical infrastructure.
The Facilities Master Plan is scheduled to be complete in April 2016 following the input of the community and the approval by the CISD Board of Trustees.
Author: Canutillo ISD