MCC to Save Nearly $1.5 Million in Interest with Bond Re-Funding
Mott Community College has announced they will save $1.4 million in interest by re-funding of voter-authorized bonds. The MCC Board of Trustees voted Monday, September 22nd to approve the re-funding a portion of the college's callable bonds. Callable bonds allow to re-fund at a lower interest rate than existing debt.
Larry Gawthrop, Chief Financial Officer for MCC, said "this proposed action demonstrates a continued commitment to fiscal responsibility to its local taxpayer by MCC. We will continue to look for savings opportunities as we move forward."
According to a news release, MCC relies heavily on bonds to finance a majority of its capital needs and they are an integral part of the overall budget. When the bonds are issued, there are several maturities or "series" within each offering having different maturity dates. Gawthrop says "because these bonds are amortized over several years, the original interest rates may be higher than what is available at a future point in time on the amortization schedule. This presents an opportunity to re-fund them at a lower rate."
The re-funding can create considerable savings in interest costs. In the past nine years, MCC has re-funded several of its previous bonds and save more than $4 million in interest.