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Plano ISD Reduces Debt Service Tax Rate, Earns Highest Bond Rating from Financial Agencies

October 17, 2013

Plano ISD received bids on Tuesday, October 15, to refund a portion of its outstanding bonds issued in 2004. A total of 15 bids were received with True Interest Costs ranging from a low of 0.972% to a high of 1.099%. The low bid from BOSC, Inc. was accepted.

The bids were rated Aaa/AAA by Moody’s and Standard & Poor’s Rating Agencies by virtue of the State’s Permanent School Fund Guarantee Program. In addition, Moody’s and Standard & Poor’s affirmed the district’s stand-alone ratings of Aaa and AA+, respectively, shortly before the bid date. The stand-alone ratings are the highest rating either rating agency currently assigns to Texas school districts.

“We are pleased we were able to restructure our short-term debt payments to reduce our debt service tax rate by five cents. As an added bonus to this planning, we also reduced the total payments for our taxpayers,” said Steve Fortenberry, Plano ISD associate superintendent for business and facility services.

The primary purpose of the refunding was to adjust the debt payments due within the 2014-18 timeframe to allow for a reduction of 5.04 cents in the district’s 2013-14 debt service tax rate.  Increases in payments in 2016, 2017, 2018 as a result of the refunding will be offset by scheduled decreases in other existing debt payments, thus having the end effect of leveling the debt service tax rate through 2018.

Because of the historically low interest rates at which the bonds were sold, the district will also realize a cumulative decrease of $307,135 in total principal and interest payments on the new bonds compared to what would have been paid on the bonds which were refunded. When the time value of money is factored in, the district will realize a net present value savings of $974,115 on the transaction.

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“We are pleased we were able to restructure our short-term debt payments to reduce our debt service tax rate by five cents. As an added bonus to this planning, we also reduced the total payments for our taxpayers.”

Steve Fortenberry, Plano ISD associate superintendent for business and facility services