Carmichaels Area to earn $780,052 from refinancing savings
CARMICHAELS – Carmichaels Area School District is in line for a hefty check on the closing of a refinanced bond issue next month. Chris Shelby of investment banker H-T Capital Markets quoted $780,052.09 as the effective savings on refinancing the $8.28 million 1992 bond series. He said the closing is scheduled for Sept. 24.
The school board passed a resolution Thursday at the rescheduled business meeting to reissue the bonds that originally paid for the elementary school.
Shelby said this is a favorable time for the school board to refinance debt, citing interest rate history and the current conditions.
“Last week, the market was at its 25-year low,” he said.
Shelby said the interest rates on the bonds before the refinancing were 6.05 percent to 6.6 percent, while the new net interest or average interest rate is 4.33 percent.
He explained the school district had floated the bonds in 1992 for 30 years and could not previously refinance because of a built-in “call date” that comes up this September. He said the debt still expires in 2022, and the annual payments remain level at about $385,000 a year.
As for how the school board may spend this savings, Shelby and investment counsel Chris Brewer said the money must be invested and used for capital projects or improvements. Brewer said the funds couldn’t be intermingled with the general budget.
Director Michael Conte, who heads the finance committee, questioned the board’s intentions, saying he does not want to be frivolous. Conte asked if the funds could be used to retire any of the debt. Shelby said that the money could not reduce the debt at this point, although a five-year “call date” was incorporated into the refinance and the district could again refinance after five years, according to the bond market.
In other matters, the school board voted to name director Richard Krause as an assistant football coach on the resignation of Damian Virgili. Krause in July was named a volunteer assistant.
Superintendent James Zalar said the opening created by Virgili’s resignation was posted to the faculty and no one applied. He said it was advertised to the public and the district got two candidates, but neither took the job.
The board voted in Krause’s favor. Solicitor James T. Davis verified that Krause could receive no compensation.
The board also debated whether the position was voluntary and what that may mean to the teachers’ union contract.
The board took an accompanying vote to draft a grievance waiver and ask the union’s approval.
On the vote to appoint Krause as the assistant football coach, Conte voted no and Krause abstained from voting. On the vote to solicit a grievance waiver from the union, Conte and director J.L. Lechner voted no and Krause abstained.
The board also made several amendments to the Haulit transportation contract. Among them, the district will realize savings of $14,280 through elimination of two mid-day kindergarten bus runs. The district also will save $17,208 by the change of a bus to a van for a non-public run, and that money will go toward the purchase of five radios for the contractor.
In another matter, board President Ron Ferek gave an update on the teacher contract negotiations during a break in the meeting.
The contract expired June 30, but Ferek, who heads negotiations on behalf of the board, said both negotiations committees have signed an agreement to continue working under the terms of the old contract.
The next round of talks is set for next Thursday. Director Ken Ganocy, who also is on the negotiating committee on the board’s behalf, said the two sides last met about two weeks ago.