By SARIT LASCHINSKY

Special to The Press

The Northwestern Lehigh school board heard a presentation at the start of the Aug. 4 workshop about a possible bond refunding opportunity.

Business Administrator Leslie Frisbie said the district had an opportunity to refund their 2017 general obligation bonds.

Scott Shearer from PFM Financial Advisors spoke to the board, and said going back to 2018 the district has saved about $1 million through various refinancing, which he described as achieving economic savings by “going from a higher rate on a piece of existing debt to a lower rate.”

With the 2017 bonds as a primary target, Shearer said the principal amount was $5.6 million outstanding.

He noted the interest rate in 2017, when the transactions were made, ranged from 2.5 percent to 4 percent.

Shearer said the bonds’ final maturity would be in February 2033, and current net savings are about $350,000 or 6 percent of the refunded amount over the lifetime of the financing, given some estimated rates.

Regarding a possible timeline for the refinancing, Shearer said discussions would be held with local banks in August and September regarding available rates and possible refinancing via a bank loan.

He also said a bid would be put out via an RFP process for underwriting services.

Around Sept. 15, the board would consider a parameters resolution, rates would be locked-in around early- to mid October, and the refinancing would close by the middle of November.

Shearer also touched upon interest rate trends, and said according to the 10-year municipal index dating back to 1993, interest rates have been higher than the current level about 98 percent of the time.

“Although we’re not at the all-time low rates, we’re pretty darn close,” he said, adding this was a good time to undertake refinancing due to the low rates.

Shearer also reviewed the district’s overall debt portfolio.

He said the district’s 2017 bonds have an average rate of just under 3 percent while the 2018 bonds are around 3.1 percent.

He noted the 2019 and 2020 bond rates are around 1-2 percent.

“Overall in the district, I think you have a pretty low debt to begin with, but the debt you do have outstanding has very low interest rates associated with it, which is obviously very good,” Shearer explained.

Speaking about the existing amortization of the 2017 bonds, Shearer said if the district did not proceed with refinancing, they would pay approximately $250,000 in debt service annually for approximately eight years.

He then said the debt service would rise to $1.5 million and then $3 million before dropping off again.

With the proposed refunding of the 2017 series, Shearer said this would save about $75,000 the first year, and then annually save around $35,000-40,000 through 2033.

He said in total, savings would amount to around $490,401.86, but when factoring in the district’s estimated cash contributions of $132,765, net savings would come out to $367.636.86.

Frisbie said the district has usually taken refinancing savings and put them into a capital reserve transfer.

She said Northwestern Lehigh has converted five refinances in such a manner in the past several years, and recommended continuing this process with the new refunding as well.

Shearer said the district could look at refinancing its 2018 bonds, and he would keep an eye on the district’s 2008 and 2009 series of general obligation notes.

The board gave its approval for staff to begin working on the refinancing process. Board President Willard Dellicker thanked Frisbie and Shearer for their work, noting how beneficial refinancing could be for the district.

“This $360,000 [in savings] is half of what we can get in a millage increase in our tax year. This is significant,” Dellicker said.

Additionally, the board discussed charter renewal for Circle of Seasons Charter School for a five-year term from July 1 through June 30, 2026, which would come up for approval at the board’s regular August meeting.

Dellicker and Superintendent Jennifer Holman noted the school had been asking for a charter renewal for several months.

Holman said the renewal document had been the result of negotiation between the district and charter solicitors.

The board then discussed the list of conditions included within the charter document, which covered a variety of items including annual auditing, report submissions, material violations and follow-up actions, special education resources, staff and personnel standards, curriculum and technology standards, and standardized testing.

Dellicker said Circle of Seasons follows the Waldorf method of education, and asked whether this should be directly specified in the charter renewal document.

Holman said the school is a member of the Alliance for Public Waldorf Education, and Circle of Seasons’ original charter application had to demonstrate its different approach to the public school education option.

In response to further questions from Dellicker about whether the Waldorf-style curriculum takes precedence over state standards, Holman said Circle of Seasons’ curriculum must continue to be compliant with Pennsylvania standards.

Regarding monitoring, Dellicker said this was a topic of particular concern, stating in past years, Northwestern Lehigh has had difficulty getting information from the charter school which must be provided to the sponsoring district’s administrators for monitoring purposes.

He said the district has needed to pay legal fees and have lawyers retrieve the information from the school.

Holman said she hoped there would be no further problems getting the requested information.

She said Circle of Seasons’ principal had talked to the board about wanting to create a “collaborative relationship with the sponsoring district.”

“Has it gotten better over time? Yes, and I hope that continues,” Holman said.

Dellicker said he was not certain if he would be ready to take action on the charter renewal at the board’s next meeting, and asked wither Holman could speak with the solicitor and have them answer additional questions.

Holman said she could put together a list of questions and speak with the solicitor to get additional clarification,

She also said the renewal can be revised until it meets the board’s satisfaction.