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Arcadia Unified School District’s Maintenance, Operations and Transportation building.
Districts taking advantage of historic low interest rates
December 7, 2020
School districts are taking advantage of historically low interest rates to refinance their current bonds and save taxpayer money.
According to published reports, school districts including Vacaville Unified School District and Blue Lake Union Elementary School District have lowered their interest rates this year.
Two districts in Los Angeles County — Arcadia Unified School District and Walnut Valley Unified School District — have each lowered their interest rates and reduced their debt service on voter-approved bonds.
Arcadia has secured $5.7 million in taxpayer savings by refinancing bonds from Measure I, which was passed by voters in 2006. The measure authorized $218 million of general obligation bonds to be spent solely for the improvement and modernization of Arcadia Unified’s schools, classrooms and facilities.
“With interest rates falling to historic lows, we were grateful to use this opportunity to create savings for our taxpayers while also being able to get more than we planned for out of these bond dollars,” said Arcadia Unified Superintendent of Business Services Dierk Esseln, in a news release.
In August, Walnut Valley Unified School District sold its $47.9 million in Measure WV Series B Bonds, with district officials estimating $15.5 million in reduced interest costs to local taxpayers. The bonds, which were approved by voters in 2016, fund construction and improvement projects at school sites throughout the community. Walnut Valley received six bids from financial institutions around the country. Bank of America Securities was awarded the 30-year bonds at an average fixed interest rate of 1.89 percent, which is significantly lower than the originally forecast 4.00 percent rate.
“These extraordinarily low interest rates can be attributed to two main factors: wise market timing and the school district’s extremely high credit rating,” said Financial Advisor Timothy Carty from Piper Sandler. “That credit rating is a testament to the strength of the entire Walnut Valley community as well as the steady leadership on the part of the school district board and administration.”
Arcadia also benefited from high credit rating. Esseln said an integral part of the refinance process involved a review of the district’s credit rating by two industry-leading credit rating agencies, S&P Global Ratings and Moody’s Investors Service. S&P and Moody’s affirmed the district’s bond ratings of AA and Aa1, respectively, citing reasons for the exemplary ratings as Arcadia Unified’s prudent fiscal practices and strong financial position with healthy reserves.
Of California school districts that have issued rated bonds so far this year, only 27 percent received as high a rating from S&P and only 10 percent received as high a rating from Moody’s, according to the district’s bond refinance report.
A two-story STEAM classroom building at Collegewood Elementary in Walnut Valley USD.
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