MISD completes refinancing of bonds saving island taxpayers $1.5 million

Mercer Island, WA, April 16, 2024  – On, March 26, 2024, Mercer Island School District successfully refinanced the remaining $40,495,000 outstanding from the 2014 Bonds. This proactive and voluntary action will not affect the District’s budget, however, it will save Mercer Island taxpayers over $1.5 million during the remaining five (5) years of bond payments.

The District and School Board began discussions in December, culminating in a formal approval resolution on February 8, 2024. The District and its partners at Piper Sandler actively monitored bond market conditions; low interest rates allowed the District to exceed its savings target. Interest rates averaged 2.94% on the new bonds compared to 3.97% on the refinanced debt.

In addition to the market conditions, Mercer Island School District was a strong candidate for investors for two primary reasons:

1. I. Responsible stewardship and financial management by the District’s Board and Administration, evidenced by the affirmation of the District’s underlying rating of “Aa1” by Moody’s Investors Service. This strong underlying rating provided impetus for investor demand for the Bonds, resulting in a lower borrowing cost to District residents.
2. District officials’ decision to participate in the Washington State School District Credit Enhancement Program (rated “Aaa” by Moody’s Investors Service). Program participation is dependent upon voter approval and provides investors with surety for the repayment of the Bonds.

Superintendent Fred Rundle was pleased the collaboration between Piper Sandler, staff, and the Board resulted in savings for the community. He said, “Our team is grateful for the market conditions, investors' recognition of the Island’s long history of credit strength, and positive benefit to the community. We understand the trust imparted to us by our citizens and truly appreciate the support of the community. While this may not yield significant savings to the individual, we hope it conveys our commitment to making decisions in the best interests of Mercer Island.”

Executive Director of Finance & Operations Matt Sullivan emphasized that these savings flow directly to taxpayers through reduced tax levies and are not available for District expenses. “This is a direct savings to our community members in the form of taxes they expected, but will not have to pay,” Sullivan said.