ADAMS TWP — They say a bird in the hand is worth two in the bush.

Five members of Mars School Board agreed with that sentiment March 10 when they voted to approve a bond refinancing at the board meeting.

“(It's) a million-dollar question,” Alisha Reesh Henry, managing director with PNC Financial Services Group. “There's nobody (who) I brought with me today that has a million-dollar answer.”

A history of rates

At the time of the vote, the district stood to save about $1 million in bond payments if pursing new investors within the year. If the board waited a year, the district could save about $2 million.

At a February board meeting, district bond counsel Anthony Ditka of Dinsmore and Shohl said the bond series would be federally taxable because tax-exempt bonds only are refundable at their callable date.

Henry told the board at the same February meeting that added savings in two years would double under current tax-exempt rates.

This means the district could see savings upward of $2 million, but would have to wait 22 months before selling bonds.

Henry told the board her job is to provide the district with as much financial information as possible to help them make a decision.

Extra credit

Henry also updated the board on the district's rating action.

Standard & Poor's (S&P), a credit-rating agency, revised its outlook on the district's longer-term debt.

“It is no longer negative,” Henry said. “It is stable.”

This asserts the district's A+ credit rating. S&P cited the district's increase in 2019 fiscal reserves and probability of a neutral or positive general fund performance in 2020, Henry said.

“The No. 1 thing that you're going to be judged by by the rating agency is the fund balance,” she said.

Henry said the district's recent termination of basis swaps was also “viewed as a ... credit-positive.”

She told the board the credit score broadens investor opportunities: Investors with an A+ minimum will now be able to purchase the district's bonds.

Record lows

Henry presented the board with a chart of taxable versus tax-exempt interest rates March 10.

“The 10-year Treasury (note) ... has hit all-time historical lows,” Henry said.

As of March 9, Henry said the taxable note hit its lowest-ever mark at 54 basis points. The tax-exempt note hit its lowest mark at 78 basis points.

“We're starting to see a little bit of an investor pull-back,” Henry said. “The investors are expecting a little higher rate given the uncertainty in the market.”

Current currency

“What does the refinancing look like today?” Henry asked. “We're almost exactly where we were when I was last here.”

Citing information presented at the February meeting, Henry said the district had been poised to save about $1,080,000.

“We're at about a $1,073,000 gross,” Henry said.

The issue's “local effort” — or the portion the district is responsible for financing — is 100 percent, meaning the district won't share any savings from the bond issue with the state.

“That is 100 percent to the district,” Henry said.

The net present value savings — or the amount of savings divided by the refinancing principal — as of March 10 was about $923,000, Henry said.

Decision time

“The bottom line is, if today was the day we closed, we would be reducing the district's debt by $1,073,000,” said Jill Swaney, district business manager.

Board members discussed where to set the floor for the bond refinancing, agreeing on $1,300,000. This number is the “trigger point” at which the district can begin the refinancing process.

The board proposed a resolution that permits the district to pre-market the bond refinancing when the trigger point is reached.

The resolution passed in a 5-4 vote. Board members Megan Lenz, Anthony DePretis, Christine Valenta and Sallie Wick voted against the resolution.

It's important to note the information presented in this article was as of the March 10 meeting. There is no current news on the refinancing process, according to an email sent Monday from district superintendent Wesley Shipley.

District solicitor Tom King did not respond to a phone call for comment at the time this story was written.