Shelby County Schools refinances debt for $5.52 million savings

The Shelby County Board of Education voted unanimously to refinance existing debt from a 4.62 percent interest rate to 2.51 percent, resulting in more that $5.52 million is savings. (File)

The Shelby County Board of Education voted unanimously to refinance existing debt from a 4.62 percent interest rate to 2.51 percent, resulting in more that $5.52 million is savings. (File)

FROM STAFF REPORTS        

COLUMBIANA–The Shelby County Board of Education approved a plan at their April 21 meeting to refinance a significant portion of its outstanding debt at a lower interest rate, which will result in savings of more than $5.52 million. The board voted unanimously to achieve the substantial savings by refinancing its existing debt, which carried an interest rate of 4.62 percent and replacing it with new debt carrying a much lower interest rate of 2.51 percent.

“Shelby County Schools have always had a deep commitment towards educating its students and providing a superior classroom experience,” said Raymond James managing director Matt Adams, who helped the district secure the new interest rate. “The finance department of Shelby County Schools has an integral role in this commitment by maintaining the financial health of the system so that maintenance, upgrades and additions to the system’s facilities may be made when needed.”

“From time to time opportunities arise for the system to lower our interest rate and save money,” said Assistant Superintendent of Finance Gary McCombs. “When those opportunities arise we have an obligation to our students, parents and taxpayers to save money where we can.”

The school district’s new debt will not extend the maturity of its existing debt and was issued at a fixed rate in a historically low-interest rate environment.  The most significant aspect of this refinancing for Shelby County Schools is the fact that the $5.52 million in savings will be received in cash, allowing the board to undertake several additions, renovations and other needed projects.

“We are excited to receive this $5.5 million because it is essentially free money – money that otherwise we would be paying in interest,” said McCombs. “We can now use it for some needed improvements and to enhance the classroom experience.”

As a part of the refinancing, Shelby County Schools had its financial health, management and credit reviewed by two independent third party companies.

“I have always felt very comfortable with the Board’s financial management practices and believe that the ratings received by the system are confirmation of how hard the CSFO and his staff work to ensure that Shelby County Schools remain financially healthy,” said Adams.

The system expects to receive the savings from this refinancing in late May.

Shelby County Schools Assistant Superintendent of Operations Tom Ferguson said the money would be used for capital improvements that will be determined in the coming months as part of the district’s next five-year Capital Improvements Plan.