The Escalon Unified School District (EUSD) announced that it has completed a refunding of its outstanding bonds the District previously issued to finance school facility improvements. Measure “B” approved by voters in 2012, authorized the District to issue $19,500,000 in general obligation bonds. The funds generated from Measure “B” were invested in local schools to modernize classrooms, upgrade vocational education facilities to better prepare students for careers and the workforce and to increase access to modern technology.
“This transaction generates over $1,300,000 in savings to our community’s taxpayers. This reduction in taxes will be a benefit to our community as we continue to provide the best possible educational opportunities for all our students,” said District Superintendent Ron Costa.
Refunding the outstanding bonds is a means to “refinance” some of the District’s existing general obligation bonds, much like a homeowner refinances a home mortgage, to take advantage of current market interest rates that have decreased since the original bonds were issued. At that time, the previous Measure “B” bonds were issued with an average interest rate of 4.7 percent. This past week, the District finalized this transaction and sold new bonds at approximately 2.8 percent (True Interest Cost), replacing higher interest rate bonds, which represents a savings of $1,302,110 to taxpayers without increasing the repayment term.
“Our Board of Trustees prides itself on being good fiscal stewards for our community. This transaction, at the end of the day is a prudent move to bring some savings to our community. We are all grateful for the community’s support of our schools here in Escalon,” said Board President and longtime Trustee John Largent.
Measure “B” funds were leveraged with State matching funds resulting in $8,052,062 in grants from the State of California that were used to modernize Escalon High School. District officials also said that EUSD is “proud to have been one of the first school districts in the region” to follow California Department of Public Health guidelines which allowed for reopening of its schools for hybrid instruction after COVID-19 closures.
“As the District’s fiduciary, we continually monitor interest rates for our clients. The current market created the opportunity to refinance the Measure “B” bonds resulting in savings of rate of over 7.6 percent, which is higher than the minimum savings threshold of 3 percent to 5 percent, recommended by the Government Finance Officers Association,” said Abel Guillen, of CFW Advisory Services, the District’s Financial Advisor.
Kristin Tiger, the District’s Chief Business Officer noted that the District was also able to maintain its high credit rating of “AA-” with a “Stable” outlook as assigned by S&P Global Ratings. She added, that “Securing this rating is also meaningful, as less than 25 percent of school districts in the State have achieved a similar rating.”