Tonawanda News — A change in state law will save the North Tonawanda School District more than $1 million next year, potentially doing away with the prospect of staff cuts, district officials said.
Assistant Superintendent Alan Getter said a large portion of a $48 million capital project completed in 2011 was financed through short-term, low-interest Bond Anticipation Notes, a financial maneuver district officials had believed would end this year because “by law you have to have to go to long-term borrowing”after a period of three to four years.
“Eventually we have to do that but right now there’s a change in law that allows us to do one more year,” Getter said.
The unplanned savings are significant at a time when cuts to state and federal funding have school districts on edge, though a portion of the $48 million capital project did receive some financial backing out of Albany. The district has also paid some of its project down over the last four years leaving it with a $35.3 million debt.
The current interest rate on the bond is currently set at 0.43 percent, with long-term serial bonds currently locked in at 3.5 percent, Getter said.
“If you multiply 3.5 percent by $35 million your interest would be $1.225 million,” Getter said. “But if you can borrow from Bond Anticipation Notes it equals to $175,000. So it’s about a million dollar difference.”
New York state law allows the use of lower bond rates for five to seven years, Getter said, with talks now circulating in the state Legislature about whether to extend the offering. But because the district began the project before the law was an enacted, there was no guarantee that the low interest bonds would be an option the district could continue beyond a few years. That changed in August when officials received word the low interest rates would be extended.