LOS ANGELES (June 10, 2014) – Taxpayers got a break when the Los Angeles Unified School District (LAUSD) recently sold approximately $1.6 billion of General Obligation Refunding Bonds (G.O. Refunding Bonds) to reduce debt service cost on prior bonds. The deal is expected to close on Thursday, June 26.
“When we borrow money to pay for projects authorized by our bond measures, we owe it to the voters and to the taxpayers who will ultimately repay the debt to make every effort to get the most attractive financing available” said LAUSD Superintendent John E. Deasy. “This includes refinancing those bonds at lower interest rates when market conditions are sufficiently attractive.”
Taxpayers will save approximately $170 million over the term of the G.O. Refunding Bonds due to the refunding. The District’s general obligation bond borrowing, including refundings, was approved by the voters in various ballot measures and is backed by property taxes on homes and other property located within its boundaries.
“The G.O. Refunding Bonds in particular achieved the highest net present value savings rate (nine percent) of all twelve refundings completed over the years,” said LAUSD’s Chief Financial Officer Megan Reilly. “We always strive to achieve at least the minimum savings rate in our Debt Policy but we were fortunate this time that market conditions were even more robust than at times in the past.”
The bonds that were refunded had previously provided funds for Proposition BB and Measures K, R and Y to: make improvements to protect students and schools in the event of fires or earthquakes; fix leaking roofs and upgrade deteriorating bathrooms, as well as for other health-and-safety repairs and modernization of the oldest classrooms. These bond measures also raised money to build 131 new schools needed to address severe overcrowding and allow every student to attend a neighborhood school during the traditional academic year instead of on a shorter year-round calendar. Currently, 130 new schools have been opened and only one school remains on a year-round calendar.
“We have taken advantage of favorable market conditions for the twelfth time to reduce debt service cost for our taxpayers,” said LAUSD Board President Dr. Richard Vladovic. “Achieving the lowest possible debt service cost is a top priority of the Board.”
Contact: Shannon Haber (213) 241-4575