WSD Bond Refinance Will Put $6.6 Million Back in Taxpayer Pockets

Moody's Investor Services announced that the Wenatchee School District's Aa3 credit rating would remain unchanged despite the district's budgetary challenges. As a result, the district successfully refinanced its 2014 bonds on March 5 for the construction of Washington Elementary and Lincoln Elementary, saving taxpayers $6.6 million over the next nine years.

Moody's, an independent third-party credit rating service, was required to assess the district's credit rating as part of its application to refinance current bonds at a lower interest rate. The District has been actively monitoring bond market conditions, and low-interest rates allowed the District to exceed its savings target. Interest rates averaged 2.69% on the new bonds compared to 4.87% on the refinanced debt. This means a homeowner with an assessed value of $450,000 would save on average $41.00 a year or $369 over the term of the refinanced bonds, which starts in 2025 and ends in 2033 when the bonds are paid in full.

Superintendent Dr. Kory Kalahar was pleased to have met and exceeded all the expectations District residents and the Board placed on his team. He said, “Our team is thankful the refinancing went so well and achieved savings even greater than what we initially hoped for. We understand the trust imparted to us by our citizens, and we took on this additional effort because our community deserves the best we can do."

Dr. Kalahar emphasized that the savings achieved today will offset future tax collections, lessening the overall burden on district residents. Unfortunately, these savings are not funds that will benefit the Wenatchee School District in any way nor be available to offset current budget reductions.

Aa3 is the fourth-highest rating in Moody's Long-term Corporate Obligation Rating. Districts rated Aa3 are considered to be of high quality and pose very low credit risk, which makes them appealing to investors. The rating informs investors about the level of risk associated with purchasing the district's bonds. The higher the rating, the lower the risk to investors and the local taxpayer interest rate. Having a good credit rating indicates that a district is responsibly managing the funds entrusted to them as a fiscal agent.

Moody's has given the district a positive rating because of its financial reserves and sound management, which positions it well in the face of declining enrollment. The district has also intentionally built up its reserves through 2023 and has a comprehensive reduction plan recommended by leadership to keep reserves at satisfactory levels. However, significant expenditure reductions will be necessary to balance operations in the 2024-25 school year.

If the district's fund balance experiences a sustained decline in fund balance and its cash falls below 10% of operating revenues, or it is unable to implement its 3-prong expenditure reduction plan and balance ongoing operations, Moody's may downgrade its rating in the future. The 3-prong plan includes staffing reductions through high school and middle school schedule changes and the proposed closure of Columbia Elementary School.