School District Bond Refinancing Could Save Taxpayers More than $1 Million

The Parsippany Board of Education, after more than a month's delay, finally adopted an ordinance to refinance its bond debt for capital projects launched in 2006. The vote—which will lead to more than $1 million in collective savings for taxpayers—came at the Tuesday BOE meeting at Parsippany Hills High School.

Mary Lyons of government-focused financial services firm Phoenix Advisors LLC explained the nuts and bolts of the refinance plan for the board.

According to Lyons, the district currently is paying about 4.46 percent interest on about $34 million in 2006 bonds, which are set to mature in 2016. 

"Until that time, we have to pay interest to the bondholders," she explained, adding that by refinancing the loan, Parsippany taxpayers can achieve budget savings of about $1.4 million.

Lyons said these savings would come off of the debt service payments and that the general budget would not be affected. Per state law, she said the money saved can only be spent on paying down the debt.

Board member Frank Calabria asked Lyons whether, as feared at the time, the board's January vote to postpone dealing with . Lyons replied that due to recently rising interest rates, the district did not incur any losses.

Calabria answered whether delaying such actions until after future reorganizations could prove expensive for the district.

"That depends on interest rates," Lyons said, noting that if the refinancing vote had taken place in January as scheduled, the bond purchase would be going through now. "At this time, you didn't lose money, but that could happen in the future."