By STARLA POINTER
Of the News-Register
The McMinnville School District is planning to refinance additional PERS debt, a move expected to save at least $2.3 million over the course of the loan.
According to a 2001 estimate from the state Public Employees Retirement System, McMinnville is facing about $25 million in unfunded liability. PERS charges 8 percent interest on that, according to David Horner, director of business services for the district.
By joining a group of Oregon school districts that are refinancing their PERS debt, McMinnville has a chance to lower the interest rate to somewhere between 6 and 7 percent, he said. The exact rate won't be known until bonds are sold in late January or February.
A 7 percent rate would save the district about $2.3 million, Horner said. A 6.5 percent rate would save it about $5 million and a 6 percent rate about $8 million.
There are some costs associated with refinancing, but they should be small, because so many districts are participating. "It should be cost-effective," Horner said.
The school board approved the deal Monday with one stipulation: If interest rates rise above 7 percent by the time a bond sale can be held, the district has the option of backing out.
This will be the second time McMinnville School District has refinanced PERS debt.
As part of the statewide pool, the district refinanced $16 million in PERS debt a year ago, thereby lowering its interest rate by 4.64 percent. "It was a very good financial move for us," Horner said.