Pelham council approves school board’s early debt pay-off
By EMILY SPARACINO / Staff Writer
PELHAM – The Pelham City Council approved a resolution March 16 that will allow the Pelham Board of Education to pay off leverage debt acquired from Shelby County early.
“The leverage debt is debt we inherited from Shelby County,” Pelham City Schools Chief Financial Officer Lauren Butts said. “We inherited it at the time of separation from Shelby County.”
Pelham City Schools separated from the Shelby County School System in July 2014
By agreeing to pay off its debt early, the Pelham BOE will pay roughly $1.9 million this year in a principle pay-off with the bond proceeds the city issued to the board in 2014, as opposed to paying about $2.5 million over the course of about 14 years, Butts said.
“They (city) issued bonds on our behalf for school construction right after we separated in August,” Butts said. “We would save between $60,000-$80,000 in a one-year period. That exceeds the amount of interest we could earn if we invested those funds.”
Butts and Pelham City Council President Rick Hayes said the opportunity for the board to pay off the leverage debt early came last week, prompting them to move quickly to prepare the resolution for approval at the meeting March 16.
“We got a phone call from the State Department of Education notifying us that there was an intent to refinance, and we had the option to participate in the refinance or send them a payment in full of the amount that was outstanding,” Butts said. “We’re not going to participate in the refinance.”
Pelham Board of Education President Rick Rhoades expressed his support of the agreement, noting the money the board saves on debt payment can be used for other resources to benefit local students and schools.
“There’s no doubt this would be a good thing for the school board and the kids,” Hayes said. “It made all the sense in the world.”
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