USC School Board Votes to Refinance 2005 Bond Issue

The refinancing is expected to reduce the debt service expenses by more than $3 million.

The Upper St. Clair School Board voted Monday night to proceed with the refinancing of its 2005 bond issue.

The refinancing is expected to reduce the debt service expenses for the by a total of more than $3 million during the remaining 16-year life of the bonds.

The 2005 bond issue became callable in July 2012. District administrators did not believe that refinancing would be available, but the continued drop in interest rates and the strong demand for tax-exempt bonds made the refinancing possible.

"The reduction in our debt service payments will help address the projected deficits for 2013-14 and beyond. However, projected cost increases, such as the state-mandated pension obligations, remain significant financial challenges for the district," Superintendent Patrick O'Toole said.

The amount outstanding for the 2005 bonds is currently about $25.5 million and the bonds mature on July 15, 2027.

The interest rates range from 3.5 percent in the shorter term to 4.4 percent in the longer term.

The 2005 bonds were issued to refinance the 1997 bonds that were issued in conjunction with the renovation.

More recent market conditions have made the refinancing of the issue attractive. Interest rates are currently estimated at 0.6 percent for the shorter term and up to 3.5 percent in the longer term.

Thoughts on the refinancing? Share in the comments section.

Jay Bahr September 13, 2012 at 12:53 PM
Whew!! How exciting that the community will have an extra $3 million to apply to the outstanding corpus of the loan!! Wait . . . what is that? We are just going to give that amount to the teacher’s union and not apply it to the credit card balance? I thought the school board members were financial stewards of our tax dollars? You mean they are not? Then they should be voted out? Right? Hello, is anybody out there?
Brian Eccher September 13, 2012 at 09:30 PM
The board did make the fiscally responsible move. The bond payment has been reduced freeing up cash to meet future obligations – namely the escalating PSERS payments. These “savings” could be refunded to the tax payers, but then the board would be accused of not planning for the future. Alternatively, as you suggest, the incremental savings could be applied to the principal debt balance, but any financial analyst would not recommend that action as 1. the cost of capital is at historic lows and 2. the need to cover immediate expenses (e.g. PSERS) trumps the potential of shaving time off of a long-term bond.
Sam D. September 18, 2012 at 10:42 PM
To Jay Bahr: Please get your facts straight before attacking the USC Teachers Union. Did you not know that this union voted to GIVE THEMSELVES pay cuts to save the district 3.7 million over the next few years? I guess it is always just easier to attack those greedy teachers, eh!?
Jason Bahr December 01, 2012 at 04:58 AM
Liberals never vote for real cuts. They vote for decreases in the future rate of growth that they strong-armed during negotiations at the top of economic cycles and then pull their back muscles when they take bows for pretending to be civic minded for accepting realistic growth targets that they should have accepted in the first place. Who you kidding??


More »
Got a question? Something on your mind? Talk to your community, directly.
Note Article
Just a short thought to get the word out quickly about anything in your neighborhood.
Share something with your neighbors.What's on your mind?What's on your mind?Make an announcement, speak your mind, or sell somethingPost something
See more »