Saturday, July 26, 2014
The Berkeley County School District school board has approved a resolution seeking a $40 million general obligation bond to pay down debt and save on interest rates.
The resolution passed 8-0 during the July 22 regular board meeting. Board member Phillip Obie was not present during the meeting.
The district has sought general obligation bonds every year since 2003, according to district Chief Financial Officer Brantley Thomas. Thomas said it’s a one-year loan at a low interest that saves the district millions on longer-term debt. He said the bond had a 0.2 percent interest last year, and while he expects it to be higher this year, it will likely be under 1 percent.
“Instead of defaulting, this is what we got to do,” Thomas told the Independent.
The bond goes against the district’s 8-percent debt capacity, so no referendum is needed to take on further debt. Thomas said taking out the debt to pay down other long-term debt might not be the most efficient way, but it’s “the only way the state allows us to do it.”
When the general obligation bond closes, it will be marketed to investors around the nation interested in one-year notes.
“It’s a loan based on the full faith and value of the school district,” Brantley said. The district repays the loan every year.