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Bond refinancing to save Lakewood taxpayers $4.6M

As part of Lakewood School District’s commitment to financial responsibility, the district successfully completed a $30,480,000 public sale of their Unlimited Tax General Obligation Refunding Bonds, 2024A. The sale was finalized on March 5, 2024. 

The purpose of this sale was to refinance the District’s outstanding 2014 Bonds. This refinancing will reduce the District’s existing debt obligation by more than $4.6 million over the next nine years.

As the district moves forward with a Renewal Educational Programs & Operations Levy on the April 23 ballot, the debt service savings from this sale means there would be no increase to the tax rate if voters renew the EP&O levy.  

The District has been actively monitoring bond market conditions and low interest rates since summer 2023. At its Board meeting on January 17, 2024, approval was granted to pursue the refunding bonds. Interest rates averaged 2.73% on the new bonds compared to 5.00% on the refinanced debt. This result allowed the District to exceed the minimum savings target established by the Board.

These savings were achieved due to many factors, including:

  • Responsible stewardship and financial management by the District Board and Administration, evidenced by the affirmation of the District’s underlying rating of “Aa3” by Moody’s Investors Service. This strong underlying rating provided impetus for investor demand for the Bonds, resulting in a lower borrowing cost to District residents.
  • District officials’ decision to participate in the Washington State School District Credit Enhancement Program (rated “Aaa” by Moody’s Investors Service). Program participation is dependent upon voter approval and provides investors with surety for the repayment of the Bonds.

Superintendent Dr. Erin Murphy was pleased to have met and exceeded all the expectations placed on her team by District residents and the Board. She said, “Our team is thankful the refinancing went so well and achieved savings even greater than what we initially hoped for. We understand the trust imparted to us by our citizens and we took on this additional effort because our community deserves the best that we can do.”

Superintendent Murphy emphasized that the savings achieved today will offset future tax collections over the next nine years, lessening the overall burden to district residents.

Lakewood will be eligible to refinance additional bonds in fall 2024. Per tax law, the district cannot start the process of pursuing the refinancing of those bonds until summer 2024, pending favorable market conditions.