McCabe saves $900K through bond refinancing

EL CENTRO – McCabe Union School District announced Wednesday it has successfully refinanced nearly $3.7 million in general obligation bond debt.

The district said the refinancing will save taxpayers more than $900,000 over the term of the bonds.

The bonds were issued after the passage of Measure G in November 2014 to build the gymnasium on the Corfman School site. The gym was completed in August 2017.

Measure G authorized the MUSD to issue $7 million in general obligation bonds, which were also used to enhance student safety and modernize outdated classrooms.

Superintendent Laura Dubbe said the average savings for homeowners in the district, assuming a $300,000 median home value, would be about $350 over the course of the life of the refinancing.

“This savings will be a benefit to our community as we continue to provide the best possible educational opportunities for our students,” Dubbe said.

Refunding the outstanding bonds is a means to “refinance” some of the district’s existing general obligation bonds to take advantage of current market interest rates, which have declined since the original bonds were issued in 2015, the district explained in release. “At that time, the Series A bonds were issued with an average interest rate of 4.19 percent. Last week, the district was able to finalize the transaction and sell bonds at of 2.76 percent, which represents a savings of $909,206 to taxpayers.”

“From a fiscal stewardship perspective, this is a prudent move that the board took to bring savings to our community,” said Board of Trustees President Judy Tagg.

“The Federal Reserve’s current monetary policy has kept interest rates low as the economy continues to recover from the COVID-19 pandemic,” said Joe Yew of CFW Advisory Services, the MUSD’s financial advisor. “This created the opportunity to refinance the Measure G bonds resulting in savings of 14 percent, which is significantly higher than the minimum savings threshold of 3 percent to 5 percent recommended by the Government Finance Officers Association.”

In addition, the district said it was also able to maintain its high credit rating of AA as assigned by S&P Global Ratings. MUSD said this feat was also meaningful as less than 25 percent of school districts in the State have achieved a similar rating.

Dubbe said refinancing did not extend the term of the debt.