Snohomish School District has successfully taken advantage of current low bond interest rates to save taxpayers more than $2 million over the next five years. A sale of bonds, authorized by the District Board of Directors in August, will refinance bonds originally authorized in 2008. The overall borrowing rate for the new bonds sold on November 4 is very low at 2.88%, compared to the rate of 5.00% on the old bonds.

“This was a great opportunity to demonstrate good fiscal stewardship and save our taxpayers a significant amount of money,” said Superintendent Dr. Kent Kultgen. He emphasized that the anticipated savings will go directly to taxpayers through lower future tax collections. “This is money that will now stay in our community and local economy, rather than go to pay interest on bonds.”

These savings are on top of almost $23.7 million saved in 2020 and nearly $820,000 saved in 2021 with the refinancing of an earlier existing bond. These reduced bond collections and stable proposed levy tax rates contribute to an overall declining tax rate for Snohomish School District property owners.

Although there has been substantial volatility in the bond market resulting in interest rates swinging over the past several months, the interest rates on these types of bonds are still relatively low compared to historical rates, said Tom Laufmann, the district’s executive director of Business Services.

Like a homeowner with a mortgage, school officials watch interest rates closely. “We have been monitoring the market closely over the past several months and working diligently to refinance these bonds,” Laufmann said. “This was our earliest opportunity to refinance these bonds, and we have been monitoring the market closely. We are very happy to be able to lock-in these savings to the district taxpayers in a time of rising costs.”

As part of the sale, the district received a strong credit rating of “Aa3” from Moody’s Ratings, which helps lower borrowing costs. Moody’s cited the district’s stable financial position and continued enrollment growth - a positive distinction at a time when many Washington school districts are experiencing financial strain. This strong rating reflects Snohomish School District’s solid fiscal management and stability.

Bonds are similar to a home mortgage. Money is borrowed and paid back over time with interest. Typically, bonds are used to pay for new school construction and/or large renovations of existing facilities. The Snohomish School District’s 2004 $141.5 million school construction bond funded the construction of Little Cedars Elementary, Glacier Peak High School, the Snohomish High School D Building and renovation of the Parkway Campus. In 2008, our community approved a $261.6 million school construction bond that funded the remainder of renovation and construction at Snohomish High School, the replacement of Valley View Middle School, the renovation and expansion of Centennial Middle School, the replacement of Machias Elementary and Riverview Elementary, and construction of the Snohomish Aquatic Center. The 2004 and 2008 bonds will expire in 2029/2030.

“This refinancing is one more way to demonstrate to our community our commitment to fiscal stewardship of the funds entrusted to us,” Kultgen said.