By MARCELLA PEYRE-FERRY
For 21st Century Media
LOWER OXFORD - Early draft versions of the 2014-5 budget for the Oxford Area School District show a 5 percent increase, adding $2.9 million to bring the budget up over $61 million.
Business Manager Charles Lewis briefly commented on the budget at the School Board’s Jan. 14 work session, noting that there is a gap between revenues and expenses at this point. “We are going to be monitoring line items for revenues, we’re going to allocate the specific increases in the budget and determine how we will fund the gap whether it will be from taxes, from fund balances, or changes to expenditures,” Lewis said.
At this point, many of the figures in the budget are guesses, particularly when it comes to state funding. “The governor will propose his budget Feb. 4, so we will have an idea what the governor’s views are for funding education in the next year,” Lewis said.
The school board is looking at ways to save money outside the budget process by refinancing several of their bond issues. The board heard information on a three step plan that could save over a million dollars in total.
The district has taken advantage of dropping interest rates in recent years to garner savings by refinancing older bond issues to a lower interest rate. At their next regular meeting, the board will see a resolution setting parameters to get state approval and then act on the refinancing when rates are right.
The first bond issue being addressed was originally issued in 2005 for the purchase of the district administration building. The current rate being paid to bond holder is 4 percent, but the resolution proposed to refinance up to $12.4 million at a rate that would produce a 3 percent savings for the district. The resolution states that the new interest must be no more than 5.2% but to get the 3% in savings the rate would have to be around 2.6 percent. At 2.61 percent, the district would save $280,000, but in practice, it is expected that the refinance rate could be well below that, for even greater savings.
The next two steps in bond refinancing could produce even bigger returns if interest rates remain low. In the fall, a larger bond issue could be refinanced for a projected savings of $700,000 with a third set of bonds refinanced toward the end of the year for $245,000 in savings. Additional bond issues would come up for consideration in 2015 and beyond.
The resolution would authorize district business manager Charles Lewis to act on bond counsel’s recommendation when the rates are appropriate, and get the signature of the board president or vice president on documents rather than waiting for a board meeting to get approval.