Restructuring of referendum debt to net big savings

Debt restructuring in the Grafton School District is expected to save taxpayers $25.9 million over the next 15 years.

The Grafton School Board unanimously approved the sale of bonds during a Dec. 13 special meeting that will refinance the district’s debt to save millions in property tax and interest payments through 2036.

The sale will reduce the district’s reliance on property taxes by $22.8 million and reduce interest payments by $3.1 million.

In addition to decreasing the amount of debt the district will have to pay off, the sale will also allow the district to pay off the debt four years earlier than expected. The referendum debt was initially expected to be paid off in 2038 but will now be paid off by 2034.

A large portion of the school district’s debt is the result of a $39.9 million referendum that was voted into action by the Grafton community in April 2017. The referendum was used in a wide array of facilities throughout the district including a new gymnasium, technology center, soccer fields, baseball and softball fields and new classrooms.

Funds from the referendum were also used to make upgrades to Woodview Elementary School and Kennedy Elementary School, demolish the former Grafton Elementary School and make upgrades to district offices.

The principal sum of the debt still owed by the district is about $34 million, which was sold through bonds at a 2% interest rate.

The general obligation refunding bonds will be sold to Milwaukee-based Robert W. Baird & Co.

Baird Vice President Mike Clark said the interest rate on the school district’s bonds is a great deal, noting that Germantown, which also has bonds with Baird, has an interest rate of 2.17%.

“This is a great result. You should feel really good about it,” he said.

Clark said interest savings the district will receive by selling the bonds are assured and that the $22.8 million in projected property tax savings may be even greater in years to come.

“We think that’s a little bit conservative,” he said of the savings amount.

In earlier discussions with the school board, Clark said initial savings were anticipated to be $1.2 million to $1.5 million on interest, and additional payments from the tax levy, and that the final result was a great improvement.

Clark said the school district’s credit rating is in good standing and that there was no concern about refinancing the debt. The school district has an Aa2 rating from Moody’s, which is the third-highest attainable.

He noted that if the district were to further increase enrollment, their credit rating may improve further, where if enrollment were to reduce, their credit rating may be negatively effected.