Penn Hills School District officials plan to save more than $1 million through bond refinancing

Penn Hills School District officials hope to save more than $1 million with some financial maneuvering.

School board members unanimously voted at a special meeting July 14 to approved refinancing of a near $25 million bond.

District business manager Eileen Navish said the interest rate on the 2012 loan was 4%.

The new 2021 general obligation bond series rate is estimated to be 3.1% or lower, saving the district about $1.086 million the next four years with about $813,000 in savings next school year.

“That’s good news for the district’s debt service,” state-appointed chief financial recovery officer Dan Matsook said July 14. “We’re trying to find ways to get through four years of a jump step that’s coming our way, and this is going to help us mitigate that.”

The jump step is a $1.7 million spike in debt service payments scheduled to start in 2022-23 and increase by that amount the next three years.

The bond was originally part of the construction and equipment funding for the elementary and high school.

“Since last summer, the board has been looking for an opportune time to maximize the savings by refinancing this issue,” Navish said. “When the savings opportunity was optimum, the board authorized the sale.”

There were no scheduled board meetings this month.

Board president Erin Vecchio said they called a special meeting specifically to refinance the bond in order to lock in a good rate.

“We should have done this six months ago when we were first told about the savings because we would have saved $100,000 more on top of the million,” Vecchio said about the refinancing. “It’s still a great thing to save the taxpayers’ money.”

Vecchio said PFM Financial Advisors and Matsook at the time had encouraged the board to hold off for potentially bigger savings.

“I’m not sure where she’s getting those numbers,” Matsook said about the additional savings claim. “We did not reach the threshold six months ago. The market didn’t bring us back the 3% mandatory savings that the refinancing called for. If we would have been able to have the 3% six months ago we would have pulled the trigger then. We reached it this time.”

Wayne G. Gerhold is the district’s bond counsel. The underwriter is Boenning & Scattergood Inc.

This is the second bond refinancing related to the construction of the two schools in as many years.

The board approved an option in late October 2019 to restructure about $100 million in bonds in order to save more than $10 million. The district is about $160 million in debt, largely due to the construction projects. The goal is to pay it all back by 2042.