Columbia Public Schools saves $7 million by restructuring debt
COLUMBIA - When you refinance your home, you try to obtain a lower interest rate so you don't owe as much interest over the course of the loan. This is essentially what Columbia Public Schools did when it restructured its debt.
When CPS accrues debt to help pay for additional projects or other expenses, it has had an interest rate on which it pays back the loan. In this latest deal, it refinanced its loan to get a lower interest rate. Over the next 14 years, this saves CPS more than $7 million.
"The District is committed to maintaining the current tax rate for debt service, which funds the principal and interest payments for capital improvement expenditures," CPS Chief Financial Officer Anna Munson said in an email. "This refunding will allow the district an opportunity to continue that commitment for future projects."
While the deal saves CPS more than $7 million, don't expect any extravagant projects anytime soon, as the majority of the savings won't be realized until 2031.
"I think we'll see as we get there," Board of Education Finance Chair Paul Cushing said when asked what the plan is for the $7 million. "Obviously the savings isn't realized tomorrow, and so over the course of the years, it's a small savings during many of those years, but it is something, and over the long term it is important to do the best we can to not send too much debt down the road."
CPS began looking at a deal to restructure its debt when Munson joined CPS in July.
"It's a double edged sword with this," Cushing said. "We don't want to say we've saved seven million bucks and then everybody thinks we have money to burn, that's not the case because it's over such a long period of time. But it's important that our tax payers know that we are working very hard to minimize costs to provide as much as we can for the kids."
Cushing says the deal to restructure was completed after the board meeting on October 9th.
To look at how much CPS will save year by year, click on this link.