Chateaugay School refinancing to save money

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January 27, 2012

— District explores refinancing for $4M left on capital project

DENISE A. RAYMO Press-Republican The Press Republican Fri Jan 27, 2012, 05:33 AM EST

CHATEAUGAY — A potential $500,000 budget gap for the 2012-13 school year is prompting Chateaugay Central officials to look for savings wherever they can.

Refinancing the remaining debt on a 2000-01 capital project at a lower interest rate would save $20,000 to $30,000 a year for the remaining six years of the bond contract, said District Superintendent Dale Breault.

"The only good thing you can say about a bad economy is there are favorable interest rates for borrowing," he said.

That was the push behind the School Board's recent decision to seek a lower interest rate on the $4 million that remains from the original $9 million project the district financed for building improvements.

DEVIL IN DETAILS

Breault said the rate at the time the bond was secured was 4.67 percent, but refinancing could lower it to less than 2 percent, "and that could be considerable savings.

"It's about saving money to keep the district afloat during a dire situation, where we're contending with continued flat state aid, even though the governor is saying there will be a 4 percent increase," the superintendent said.

"But the devil is in the details."

At the same time, the district will also be trying to fashion a budget to stay within the state-mandated 2 percent property-tax cap.

This is the first year the district's debt has been eligible for refinancing under its contract terms, and the financial advice the board received from its consultants pointed out the potential savings.

"We have six years left on the bond and the potential to save $20,000 to $30,000 a year, and that's why we're doing it," Breault said.

"We have a $500,000 gap that has to be bridged, so it's going to be a difficult year for Chateaugay Central School."

Email Denise A. Raymo at: draymo@pressrepublican.com