Penn Hills School District to save millions through bond refinancing
Penn Hills School District officials hope to save millions through bond refinancing.
Five firms submitted about a dozen options for school directors to consider.
Daniel Matsook, the district’s state-appointed financial recovery officer, said more than $100 million in bonds could be restructured to save Penn Hills between $15 million and $17 million.
The district is more than $172 million in debt largely due to the construction of a high school and elementary school.
Philadelphia-based Public Financial Management Co., a public financial advisory firm, is expected to work with district officials to select their best option.
Several board members and administrators met at a finance committee meeting Monday night to discuss some of their options.
Board President Erin Vecchio questioned who would pay PFM’s estimated $90,000 in fees.
She said the district cannot afford to cover that expense.
“While we all have a sense of urgency and want to take advantage of the low interest rates, this board is taking the time to look at proposals proposals carefully and to reduce spending everywhere we can,” Vecchio said.
Matsook explained the state Department of Education will take care of PFM’s fees.
“This transaction we’re going to do is going to be very complicated because of our credit rating,” he said. “Distressed schools have extra challenges when it comes to borrowing and doing bond refinancing. (PFM) have the experience of overseeing all the other distressed school districts in Pennsylvania. It’s a good thing for the board.”
Board member and former district treasurer Rob Marra supports having an independent financial advisor assist in the process.
“The interest rates on these things are very low, and there’s a lot of money available in the municipal bond market,” said Marra. “It’s a good time to do it. There’s opportunity there. You’re talking about some very big numbers, and some of these options can get a little complicated.”
The state Department of Education placed Penn Hills in financial recovery in January after being in financial watch since 2017.
Matsook, former Wilkinsburg Superintendent, was appointed as the school district’s financial recovery officer in February.
District officials approved a financial recovery plan June 29. State Department of Education officials did the same in mid-July. It’s available for review on the district’s website, phsd.k12.pa.us.
District documents indicate the debt could be paid in full in 2042 as long as Penn Hills does not incur additional debt.
Michael DiVittorio is a Tribune-Review staff writer. You can contact Michael at 412-871-2367, [email protected] or via Twitter .