Hoover school board makes financial moves to save millions

The Hoover school board tonight made several financial moves designed to save the school system millions of dollars related to its debt and investments.

The board authorized Superintendent Kathy Murphy to proceed with paying off up to $7.5 million worth of debt associated with a 2010 bond issue and to refinance a 2005 bond issue.

Together, those two moves should save the school district about $4.5 million in today’s dollars over the life of the debt, Chief Financial Officer Tina Hancock told the school board.

School officials had considered paying off their 2005 bonds, but their financial advisor, Raymond James, recommended paying off some of the 2010 bonds instead because they would save more money by paying off bonds with a higher rate and longer maturity.

The school board also voted to invest about $50 million of the school district’s overall fund balance in U.S. treasury bonds. That should generate an extra $434,000 a year for the school board, Hancock said.

Steve Vickery, a senior vice president for BB&T Bank, told the school board it has been earning about 1/10 of 1 percent with its current investments. Switching to U.S. treasury bonds should give the school board a return of about 1 percent, he said.

Hancock said the school district would still have about $27 million available to cover its current debt payments and at least one month’s operating expenses. Plus, if the school district needed to access the $50 million for some reason, the treasury bonds could be quickly liquidated, she said.

Vickery said the school system is guaranteed not to lose any money with the U.S. treasury bonds.