The Alliance Public Schools District is in for some savings after a strategic plan allowed for the early redemption and prepayment of a bond, resulting in more than $100,000 in savings.
Superintendent Dr. Troy Unzicker explained that this bond was in place prior to his arrival 10 years ago.
“They were originally scheduled to run out until 2041, which was the pay off on the last one,” said Unzicker. “About four years into my term, we re-evaluated those and redid several of them. We got them all cut down to 2031 at the latest. This one that we are paying off ahead was either scheduled for 2029 or 2030, but with the Quality Capital Undertaking Fund, that’s the 5.2 cents we tax on the tax rate, we’ve stayed aggressive on that so we could prepay.”
By taking those steps, Unzicker explained that the district will save approximately $125,000 in interest payments.
“If we hadn’t done that, we’d keep paying until 2030, but we’d pay another $125,000 in interest,” Unzicker said. “So, we’re paying off the principal balance now to save the district some interest money.”
Unzicker explained that this early payoff is part of an overall strategy to pay off debts early.
“Once this one is paid off, we will have one more bond left on the original notes for the PAC, and that one bond is scheduled to run out until 2031,” said Unzicker. “We’re not able to prepay it without penalty until December of 2025, so we will continue to take the 5.2 cents on the capital undertaking fund because our intention will be to prepay as soon as possible there. I’m hopeful that we’ll be ready to make that payoff in 2025. That will end our capital undertaking fund. If we have a project the board deems in that capital undertaking fund, the maximum we’re able to tax with a new project would be three cents. So, no matter what, we will lower taxes 2.2 cents, and if we have no project ready to roll out, we would drop 5.2 cents of taxing, so we would finally have some tax relief for our folks on personal property taxes.”
Unzicker said that there is one other note for the HVAC at Alliance Middle School, which will give all of the buildings new HVAC and air conditioning.
“Once that project is completed, we have one payment we’re making, and actually we took a loan on when we were doing Emerson and the High School,” Unzicker said. “I just did a seven-year lease purchase, so that note has a final payoff in January of ‘27. That’s another one, if we can prepay it without penalty, the call date is July 28, 2025. In July of ‘25, if it makes sense to pay that note off to save a little interest, we will. If there’s not much for interest left, we may just go ahead and let it run out to 2027.”
Unzicker noted that the district has improved its financial standings in recent years to allow for these early payoffs.
“A few years ago, they weren’t in a position to do anything like this, so we’ve come a long way from that major debt to a reserve in our funds, like our our building fund and capital undertaking fund, built up so that we could do that,” said. Unzicker. “We went through some pretty lean and tough years on spending, but we’re getting it in shape.”
Andrew Forney, Senior Vice President with D.A. Davidson spoke at the board meeting on June 12, praising the district for their work on this measure.
“There was some good fiscal management by the district and current administration,” said Forney. “You’ve been able to save up enough to prepay these bonds. We’re actually paying them off seven years early, saving the district about $125,000 in total interest costs. It’s always good news to present on that.”
Forney told board members that after the bonds are paid off, the district will have less than one percent debt to assessed valuation. He explained that auditors typically say between 3-5 percent is good, and high is 10-12 percent range.
“You guys are half of one percent,” Forney said.
Forney explained that the bonds would be paid off on July 17 due to a required 30-day notice. Board members voted unanimously to approve authorizing the prepayment of the bonds.