December 18, 2014

Medina
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Federal budget battle can be boon for Brunswick Schools

BRUNSWICK — The sequester — the much publicized imposition of across-the-board budget cuts in federal spending — isn’t bad news for everyone.

Brunswick Schools officials say the cuts likely will save the district some money by allowing it to reissue $15.4 million in bonds at a lower interest rate.

Brunswick Schools borrowed the money for it $24 million districtwide construction project in 2010 that included work at the elementary schools, Visintainer Middle School and the high school stadium.

The district issued the bonds using the Build America Bonds program, authorized by the federal American Recovery and Reinvestment Act. The program reimbursed the district a portion of its payments on the bonds.

But in 2011, Congress passed major budget cuts that would impact federal spending if lawmakers couldn’t reach a better compromise.

Those “sequester” cuts went into effect in January and included reductions in reimbursements provided by the Build America Bonds program. Brunswick Treasurer Patrick East said that change breaks the bond agreement and means the district can reissue the bonds at a lower interest rate.

“They didn’t follow the rules, and violated our agreement, so we can now re-issue the bonds,” he said.

While the slashed reimbursements are estimated to cost the district about $25,000, East said the district will be able to save more than that by taking advantage of interest rates that are near an all-time low.

“If the interest rates were higher now, we’d be taking a beating, but because they’re lower now, it’s a good thing for us,” East said.

Bond investors who hold the bonds will be reimbursed when the new bonds are reissued, but will lose out on interest rate payments they had expected to get.

“The only people hurt by this are the people who hold our bonds,” East said.

East said he won’t know the total savings until the district issues the new bonds, which could take up to eight weeks.

Contact reporter Loren Genson at (330) 721-4063 or lgenson@medina-gazette.com.