Greater Latrobe School Board eyes bond refinancing, $200K savings

Greater Latrobe School District could save more than $200,000 by refinancing bonds issued in 2016 to help build the new Latrobe Elementary School.

The school board this week set parameters for refinancing no more than $10 million of the bonds to take advantage of lower interest rates.

“To be considering this refinancing, it’s a good time in the market,” said consultant Scott Shearer of Public Financial Management.

He acknowledged that last week’s presidential election and other factors have combined to create volatility in financial markets. “We’re going to continue to see that up-and-down in the market,” he said.

Still, according to district business administrator Dan Watson, Greater Latrobe could expect to realize a one-time savings of about $268,000 if it were to refinance $8.1 million of the outstanding bonds now. That’s based on a current interest rate of less than 2%, compared to an average existing rate of 4% that is payable on the bonds.

The district set a net savings target of $204,000, or 2.5%, to make it worthwhile to proceed with the refinancing.

If all goes according to plan, Shearer said, interest rates for the refinancing would be locked in by early December, with the transaction closing around Christmas.

The maturity date of the bonds, in October 2027, would remain unchanged.

“We’re trying to take as much savings as possible up-front,” said Shearer. That includes projected savings of $120,000 in 2021 and $140,000 in 2022.

The Greater Latrobe School Authority, which actually owns local school buildings and leases them to the district, approved similar parameters for the proposed refinancing.