Dearborn Public Schools is refinancing old bonds to save district taxpayers millions of dollars while positioning the district to ask voters for another bond next year.
On March 8, 2021, the Board of Education approved reissuing $50 million in bonds this year and $15 million next year, if interest rates continue to be favorable. Reissuing bonds is similar to a homeowner refinancing their mortgage, but with bigger dollar amounts. These bonds were originally issued in 2014, after voters approved a 2013 SMART bond to fund needed infrastructure improvements and equipment in the schools. With interest rates now lower, refinancing the bonds is expected to save taxpayers more than $9.3 million over the life of the bond, even after paying for the refinancing costs. More technical details of the refinancing were presented to the board finance committee.
Voter-approved bonds are funded directly through local property taxes. Tax rates to pay the bonds are set based on total property values in the district and the amount needed to make the bond payment. If property values climb more quickly, then the tax rate falls. For the SMART Bond, voters approved keeping a 5.35 mill tax rate. That rate has since fallen to 3.5 mills as the district paid off old debt and total property values in the district increased. (One mill is $1 of tax for every $1,000 of taxable value.)
This year’s refinancing will not change the current 3.5 mill bond tax rate. The district is laying the groundwork to ask voters to approve another bond in 2022 while maintaining the same millage rate. The bond would be one step in a long-range infrastructure plan looking to make much needed infrastructure repairs and upgrades, add classroom space, increase security, and possibly fund other large ticket items like buses. Bond money cannot be used for everyday expenses including salaries, utilities or books.
Dearborn Public Schools regularly reviews bond rates and periodically refinances when doing so will save money for residents.
“We work hard to be good stewards of taxpayer dollars, and refinancing now will save our residents and businesses money, even if it does not put any more funding into the district’s budget,” said Tom Wall, Executive Director of Business and Operations. “This refinancing does set us up to ask for another bond next year, hopefully with little to no increase in the millage rate.”