TEMPLE, Texas — The Temple Independent School District will save more than $3.6 million over the next 15 years after the district was able to price refunding bonds from 2016 earlier this month. The TISD board of trustees received an update on the bond refunding during Monday night’s meeting (June 9).
The district was able to refund $40,255,000 of the remaining principal at an interest rate of 3.896%. The refunding will result in an estimated savings of $3,671,080 over the 15 years remaining before the final bonds retire in 2041. That means the district will save an average of nearly $293,000 per year in annual debt service payments beginning in fiscal year 2027.
“TISD has the responsibility to always look for taxpayer savings,” said Dr. Bobby Ott, superintendent of Temple schools. “This is a responsibility we take very seriously, as evident by lowering the tax rate 13.0 cents over the last four years. This bond refunding is yet another example of sound fiscal management. I am very proud of our finance department and assure our taxpayers that we remain committed to efficient financial practices while maintaining a high-quality standard of delivering educational services.”
The bonds refunded were originally sold in 2016 and become callable on August 1, 2025. During the board’s April meeting, trustees authorized district administrators to refund the bonds subject to a savings of at least 3%. The bonds were originally sold to fund capital projects within the district and interest rates ranged from 4 to 5% at the time of the sale. Like refinancing a mortgage, the refunding did not decrease the principal of the bonds or change the term length. The savings will come from lower interest payments over the remaining life of the bonds.
“A bond refunding allows us to restructure our bond debt, much like refinancing a mortgage on a house, though there are some key differences. School districts must wait a predetermined period before the bonds become callable, meaning they can be refunded,” explained Brandy Stanford, chief financial officer for TISD. “Another notable difference is that while interest rates may vary during each year of the bond’s term, these rates are set in advance and are not influenced by future market conditions, unlike variable mortgage rates. We appreciate the board’s authorization in April, which allowed us to choose the optimal timing for securing interest savings amidst market uncertainties.”
The actual savings should amount to 5.640%, well above the 3% threshold set by the board and the total savings are nearly $428,000 higher than originally estimated when the refunding was first approved in April.