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Easton Area School Board signals intent to hedge its bet on bond refinancing

By Len Righi, WFMZ.com Reporter
Published On: Sep 11 2013 07:48:47 AM CDT
EASTON, Pa. -

A school board in Northampton County will likely hedge its bet and try to wring more savings out of a plan to refinance two sets of bonds.

The Easton Area School Board signaled its intent Tuesday night to go along with a plan that would save the district more than $2 million by refinancing bonds from 2006 sometime in the next few weeks now and delay refinancing of bonds from 2005 until the beginning of next year.

Financial adviser Kenneth Phillips, managing director of Lancaster-based RBC Capital Markets, told a meeting of the board's standing committee that if all of the bonds were refinanced at once, the district would save another $1.6 million.

However, he said, if the board was willing to wait a few months on refinancing the 2005 bonds, the savings could be even greater.

If the board choose that option, the refinancing would take place sometime in the first quarter of 2014, although the board would need to make a decision to do so by Thanksgiving.

Board member Dr. Pat Vulcano Jr., who said he studies the market "quite intensely," said he favors hedge strategy, and his colleagues seemed to agree with him, even if, as Phillips put it, "we may be kicking ourselves come January 1."

Phillips praised the board's financial planning, noting that the district has saved a total $4.25 million with its last three bond refinancings.

In other business, the board was updated on phase one of a two-part plan to make one secondary and six elementary schools more secure.

Phase one will cost $1.425 million and involves constructing and restructuring vestibules so school officials will be better able to control visitors; replacing keypads with card readers for employee access, and placing surveillance cameras at card reader stations.

The schools affected are: Easton Area High School ($256,000) and Paxinosa ($250,000), Cheston ($245,000), Tracy ($188,000), Palmer ($160,000), Forks ($137,000) and March ($45,000) elementary schools.

Phase one work will be done from May through August, if the board approves.

Michael Simonetta, the district's chief operating officer, said some of the money needed for phase one was approved as part of the 2013-14 budget and part will be in the 2014-15 budget. He also said the board could also tap the district's capital reserve fund if necessary.