Butler County spends money to save money when refinancing bonds. Over four bond refinancings since 2003, the county spent $1.5 million in fees.

County Controller Ben Holland said the cost to refinance is why the process must be scrutinized each time it’s done.

Among the fees are paying a financial adviser and an underwriter.

“Every time you do this, you have these costs associated with it,” Holland said.

In 2003, the county combined refinancing and borrowed additional funds totaling $51.4 million. The county budgeted $592,429 in fees.

Holland said the actual cost was slightly lower because there was a difference between the $110,000 set aside for the cost of issuance, which includes the financial adviser fee, and what was actually spent.

The actual issuance costs weren’t available.

The underwriter was paid $227,967.

In 2004, the county refinanced $47.4 million — the previous year’s borrowing.

The fees were budgeted at $516,988. The underwriter was paid $218,204 while $70,600 was set aside for issuance costs.

In 2006, the county combined new borrowing and refinancing that totaled $10.1 million.

The fees were budgeted at $134,601. The underwriter was paid $47,601 while issuance costs were set at $45,000.

The money saved by securing lower interest in those refinancings was not available.

For the 2014 refinancing, the county refunded a 2004 bond originally worth $45.6 million.

The county spent $366,587 to save nearly $4 million.

Holland agreed with the county commissioners’ decision to refinance due to low interest rates.

“It was a great time to refinance,” he said.

However, Holland said the $288,037 paid to the underwriter, Janney Montgomery Scott of Philadelphia, could have been lower had the county auctioned off the service to the low bidder.

“That was high,” he said about the fee.

Holland said the underwriter fee could have possibly been as low as $200,000 if there were bidders vying for the service.

“You really want to watch the underwriter discount,” he said.

County Commissioner Bill McCarrier, board chairman, disagreed an auction would have guaranteed a lower fee.

“You never know what will happen in an auction,” McCarrier said.

He said it’s a moot point to debate how the 2014 refinancing was done.

“It’s a done deal,” McCarrier said.

The county hired the underwriter on the recommendation of an internal committee and the PFM Group, the Harrisburg firm serving as the county’s financial adviser.

The new repayment schedule reduces the 2014 and 2015 payments to $199,346 and $3.4 million, respectively.

This move saves the county $3.1 million budgeted for debt service this year and $811,000 in 2015.

Holland and county Commissioner Jim Eckstein, the minority board member, previously complained that the repayment schedule should have been set for lower payments over the course of the entire term, which ends in 2026, instead of lowering the first two years.

Holland and McCarrier agree the $3.9 million freed up by the refinancing should be used to help pay off the 2006 borrowing in 2016.

According to Holland, the remaining $2.2 million from the 2006 borrowing could be paid via a bank loan.

While Eckstein agreed the 2006 series of bonds should be paid off, he said there are more urgent needs for the $3.9 million, such as bolstering the county pension fund.

He criticized the county’s history of hiring underwriters without using a strict bidding process.

“This is poor management,” Eckstein said. “That’s shameful. We should be ashamed of it.”

Out of the 2014 issuance costs, which totaled $78,550, $20,000 was for the financial adviser, $25,000 was for bond counsel and $10,000 was attributed to printing costs.

Holland questioned the printing price.

“I would have challenged it,” he said.

Amy Wilson, chief county clerk, explained the allotted $10,000 was for the PFM Group to prepare and publish information. She said the actual amount falls between $9,000 and $10,000.