MCC saves money by refunding bonds
By Lisa Elliott
The McLennan Community College Board of Trustees decided during its February 2021 meeting to take advantage of the low interest rate environment in both the taxable and tax-exempt bond markets and to refund several of the MCC’s outstanding bonds. The refunding transactions will save MCC and taxpayers a total of $2.6 million over the remaining life of the bonds.
The limited tax refunding bond transaction provided the majority of the savings. The College refunded $24.5 million in outstanding limited tax bonds. This refunding generated gross savings of $2.26 million, which has a net present value of $2 million. This savings directly impacts MCC’s property tax rate, which is comprised of two portions: a maintenance and operations rate, which helps operate MCC, and an interest and sinking fund rate, which provides revenue to service tax-backed debt.
The revenue-refunding bond transaction was a smaller refunding with $2.38 million. This refunding generated gross savings of $352,395, which has a net present value of $333,555. Revenue bond debt service is paid by MCC from a combination of resources — tuition and fees, auxiliary revenues, and interest income. Savings on revenue bond debt service allows resources to be directed to other programmatic priorities of the College.
MCC prides itself on being financially responsible, and with the guidance of our financial advisors at RBC Capital Markets, this decision shows a continued commitment by the Board of Trustees for the responsible use of financial resources.
For more information, please contact Dr. Stephen Benson, Vice President of Finance & Administration at MCC, at [email protected] or 254-299-8679.
Lisa Elliott is director of marketing & communications for McLennan Community College.
The Act Locally Waco blog publishes posts with a connection to these aspirations for Waco. If you are interested in writing for the Act Locally Waco Blog, please email Ferrell Foster at [email protected].