Photo by Ted Lutz â€“ Steve Perry, business manager for the Kane Area School District, smiles as he looks over documents for refinancing loans for the recent school renovation and construction project. The district will save $372,503 in interest costs. Most of the savings will be seen in the current fiscal year that began July 1.
The Kane Area School District is saving $372,502 by refinancing loans linked with the renovation of the middle school and the construction of a new elementary school.
Nearly $339,000 of the savings will be seen in the current fiscal year that began July 1.
The savings wonâ€™t affect the school taxes due in August. Instead, the savings of $338,922 will be seen in the form of a budget transfer from debt service to the capital reserve fund. This is the fund tapped to pay for major school repairs such as the new roof at the high school.
According to information provided by School District Business Manager Steve Perry, the district is taking out a new loan of about $12 million.
This amount will â€śrefundâ€ť the outstanding balance of $8,485,000 on the 2008 bond issue of $9,995,000. The new loan also will â€śrefundâ€ť a portion of the 2009 bond issue of $770,000.
The net interest cost for the district for the 2008 bonds was 3.92 percent. The net interest cost for the 2009 bonds was 4.10 percent.
The net interest cost for the new loanâ€”another bond saleâ€”is just 2.74 percent, according to Perry.
â€śInterest rates are at a historic low right now,â€ť Perry said in explaining why the school district has taken action to refinance its only debt. â€śWe thought we were doing very well with the original interest rates. We didnâ€™t expect the rates to keep going down.â€ť
Perry said he first began looking at the loan refinancing option in February. The Finance Committee for the Kane School Board in May set parameters for possible refinancing action.
The committee set a â€śminimum goalâ€ť of $250,000 in interest savings before moving forward on the refinancing plan. The savings of $372,503 far exceeds this goal.
See full article by purchasing the July 28 edition of The Kane Republican.