Special R-2 workshop tonight to discuss bond refinancing plan

Dave Marner
Proposed federal legislation in ‘Tax Cut & Jobs Act’ could restrict future cost savings after Dec. 29, bonding firm told district officials

Two proposed pieces of federal legislation which could potentially affect a school district’s ability to refinance general obligation bonds by year’s end have prompted R-2 officials to schedule a special workshop for 6 p.m. tonight (Wednesday).

Gasconade County R-2 School District’s Board of Directors will meet in an emergency, or special, workshop setting.

“A little of both,” said Superintendent Dr. Chuck Garner on Tuesday afternoon.

The agenda, posted Tuesday morning and emailed to The Republican just before noon, includes discussion and information on bond refinancing, an audit report, middle school football, and a high school trip.

Garner discussed each of the topics and noted the workshop setting will be for information only. He hopes their discussion will help board members come to votes on several of the topics more quickly when they convene for their regular monthly meeting which is scheduled for 7 p.m. Monday, Nov. 20.

A representative of the bonding firm George K. Baum & Company is expected to attend the meeting Monday. Garner said the board will be asked to fast-track a proposal to refinance $2,704,247 in Series 2015 general obligation bonds in an effort to save $113,363 through lower interest rates now through 2035.

While the amount of total savings is not that substantial, it represents a savings of $10,000 to $15,000 annually over the life of the bonds which were issued after overwhelming voter approval of the 2015 “no tax increase” bond issue for capital projects and technology upgrades.

“It isn’t a great savings but it is a cost saving over the life of the bonds,” said Garner. 

Garner said Baum’s people informed the district at least one of two pieces of federal legislation may come up for a vote yet this week. Garner said the proposed pieces of legislation are tied to the “Tax Cut and Jobs Act” currently being considered in both the U.S. House of Representatives and the U.S. Senate. HR1-HB1 is currently being crafted in the House Ways and Means Committee while the Senate’s Joint Committee on Taxation is considering JCX-51-17.

“As proposed in both the House and the Senate, this would potentially jeopardize our ability to capitalize on low interest rates after Dec. 29,” said Garner. “We’re going to talk a little about the refinancing of our bonds. When interest rates go down, we’ve done a good job of taking advantage of lower rates to save some money.”

Documents provided to the district by the Baum firm show a cost of issuance of $49,100 to refinance. The documents show the district saving a total of $150,500 over the life of the issue. Subtracting the issuance cost, the actual savings is $113,363.03.

Garner said he was told the proposed federal legislation could limit the district from refinancing the 2015 bond issue until 2023.

“We save money but they lose money,” said Garner. 

The special meeting was called so the district can get a slight head start on the paperwork required to have the 2015 bonds refinanced by the end of the year. Garner said the district would need to have the paperwork filed by Dec. 15 to refinance these bonds by the Dec. 29 deadline.

After Monday, the board is not scheduled to meet again until Monday, Dec. 18, unless a special meeting was called. 

“It may not go through,” he noted. “If it does go through, we may be hog-tied. I want to give them (the R-2 board) the information and let them talk about it.”

No decisions are expected to be made since this is a workshop setting. Final action would come on Monday.

Also at the workshop, Garner said he expects to present an overview of the district’s annual  independent audit. A formal presentation is expected on Monday.

Garner plans to have additional discussion on a proposal to add a middle school football program for seventh and eighth-graders. Sullivan and Owensville are the final districts in the Four Rivers Conference to take formal action on the proposal, Garner said.

“I don’t know where it’s going,” he said. “I’m hoping this discussion will lead to a quick vote (on Monday).”

Final action on the proposal was tabled last month for further discussion.

The board will also be presented with a proposal by Cindy Hawkins, principal at the high school, on a proposed trip during the 2018-19 school year by OHS students to visit Costa Rica. Fund-raising would need to begin now and continue through the next year, said Garner.

This workshop will be open to the public.

After covering the items cited above, the board is also scheduled to go into a closed session for discussion of a real estate matter covered under state statute. Garner said discussion will mostly center on how the district wants to clear up a 1923 property deed for the Administrative Building and lot which lists it as “school property.” Garner said the question was raised if that listing could potentially delay a sale of the site should one be approved.

He said the district receives periodic calls about the property. He said everyone who calls is told to make an offer. He said the board could either accept the offer, reject the offer, or make a counter-offer.