The Board of Education of the Montgomery County R-II School District closed a refinancing on February 25 that was approved by a resolution at a regular meeting on Nov. 14 that authorized the sale of $5,500,000 general obligation refunding bonds to its municipal bond underwriter, L.J. Hart & Company of St. Louis.

The Series 2025 Refunding Bonds were finalized on Feb. 4 with interest rates of 4.00% with reoffering yields ranging from 2.98% to 3.90% to constitute a new effective rate of 3.86%, compared to an average interest rate of 5.00% for the Series 2020 Bonds that are being refunded. The Series 2020 Bonds were sold at premiums that produced $919,199 of additional funds for the safety and security upgrades, energy efficiency updates and other improvements to the district’s existing facilities. Through this refinancing, the district reduces future interest expense by $790,240, which was an improvement of $14,129 from the November 14 meeting. This is the result of the recently improved municipal bond market as well as the good credit of the district. These new savings plus the historical savings of $737,953 from previous refundings and prepayments means that the district has realized $1,528,193 of reduced interest expense since 2010.

R-II Superintendent Dr. Tracy Bottoms expressed enthusiasm and support for the refunding option selected by the Board of Education.

“This plan achieves significant savings and allows the District to capture better conditions in the municipal bond market for the benefit of our taxpayers,” Dr. Bottoms said. “It also preserves considerable flexibility for the district in the future for building improvements with no-tax rate increase opportunities.”

Brad Wegman, Senior Vice President of L.J. Hart & Company, prepared the refunding proposal and explained how it can fit into the long-range plans of the district. Mr. Wegman mentioned that the three significant factors making the Series 2025 refunding attractive were the recently improved interest rates, the fact that the Series 2020 Bonds are subject to prepayment at no penalty on March 1 and the district’s ability to participate in the State of Missouri’s Direct Deposit Program. This program allows the district to receive a “AA+” rating from S&P Global on the refunding bonds.

Mr. Wegman complimented Dr. Bottoms for his prompt and thorough preparations to supply the data necessary for the official statement as well as the Board of Education for their foresight in making the Series 2020 Bonds callable in five years. The Series 2025 Refunding Bonds will also have a five-year call feature of March 1, 2030 at no penalty.

The Series 2025 Refunding Bonds were made available to local financial institutions as part of the marketing procedure and Peoples Savings Bank has purchased $615,000 and the Silex Bank committed to $300,000 of the bonds as well. The closing for the Series 2025 Refunding Bond issue was scheduled to occur on Feb. 25.

Dr. Bottoms stated that he was pleased that efforts were made to accommodate local investors.

“It is great that our marketing procedures facilitated this local involvement while still receiving attractive interest rates and we appreciate the support of our community banks,” he said.

Several board members commended Dr. Bottoms and L.J. Hart & Company for developing the attractive refunding plan.

“We are glad to be able to save $790,240 of our taxpayers’ money by taking advantage of the recently improved bond market conditions,” said Maria Stille, President of the Board of Education.