Greater Latrobe School District is looking into refinancing some outstanding bonds for potential savings while experiencing a drop in tax revenues during the pandemic.
The school board this week authorized business administrator Dan Watson to confer with Solicitor Ned Nakles and with district financial consultants to consider whether Greater Latrobe could benefit from refinancing any of the bonds issued a few years ago to help finance construction of the Latrobe Elementary School. The $24.8 million building opened in December 2018.
Watson said the consultants — including PFM Financial Advisors and bond counsel Lynch & Lynch — will look at more than $30 million in bonds issued in three series, between 2016 and 2018.
Refinancing the 2016 bond issue of $10 million could offer the greatest savings through a reduced interest payments, possibly as much as $200,000, according to Watson.
“It has a coupon (interest) rate of around 4%,” he said. “When you look at the rates right now, they’re under 1%.”
Watson said the school board is expected to consider a recommendation about the refinancing at its Nov 10 meeting.
“If the savings is immaterial, we won’t proceed,” he said. “But if it seems its significant enough, then we’ll request to go ahead. Nothing may come of it, but it’s worth doing the research.”
Watson couldn’t say if any savings from refinancing would be applied toward the district’s current budget or toward the 2021-22 budget that has yet to be developed.
He noted the coronavirus pandemic’s negative impact on the economy has translated into a drop in the district’s local tax collections. Receipts from the earned income tax are down by 3% compared to the previous year, he said.
