Debt Refinancing Saves Lakota Taxpayers

Debt Refinancing Saves Lakota Taxpayers
Posted on 12/15/2020
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Jenni Logan, treasurer/CFO for Lakota Local Schools, announced that the district will save more than $6 million in interest expense due to recent refinancing of debt. 

refinancing saves taxpayers“Just like our community members, we look to take advantage of a low-interest rate market in order to refinance our debt and save our taxpayers money,” said Logan. “We asked ourselves if we could restructure our debt and pay some off early. Our goal is to lower the interest expense we have as a district,” she explained.

The district has two types of bonds that are used to pay off its debt. The first is an unlimited tax general obligation (UTGO), a bond that is backed by voter approval to be used for debt service payments. The second is a limited tax general obligation (LTGO) which is used exclusively to pay debt associated with permanent improvements such as technology and facilities. While the average annual savings of $161,000 to the LTGO are applied towards other permanent improvement needs, those to the UTGO are a direct savings to taxpayers.

“We are excited to announce a 16% savings with our UTGO bond and a 14.2% savings with our LTGO,” Logan said. Additionally, the district is able to accelerate its debt payments five years earlier to mature in 2028 instead of 2033. Before the restructuring, Lakota’s debt payments were scheduled to begin to dip in 2027 only to begin to rise again in 2030. Now, with the new structure, overall annual debt payments will drop in 2028 and remain flat through 2033.

Logan also reminded that collected (effective) bond millage was reduced by a mill in 2019 and again in 2020, going from four mills to the current two mills. Refinancings like this have taken place since Logan arrived in 2011 and have played a role in the decrease of the tax burden on Lakota’s community. That, coupled with a steadily growing community with increasing values of residential and commercial properties, is a great combination for Lakota.