Oxford school district taxpayers can expect to save nearly $7 million in debt interest after the board of education voted 5-0 to approve a refunding bond resolution on July 26.

The bonds refunded the district’s outstanding 2006 Refunding Bonds and the district’s 2010 School Building and Site Bonds, Series A.

This resolution authorized the sale of $42 million in general obligation refunding bonds at an average interest rate of 2.19 percent, compared to the Series 2006 Refunded Bonds, which carry an average interest rate of 4.38 percent, and the Series 2010 Refunded Bonds, which carry and average interest rate of 4.22 percent.

The 2016 Refunding Bonds were sold with a final maturity in 2039 (a repayment term of approximately 23 years).

The move reduces the future interest expense by more than $7 million.

This $7 million, combined with the approximate savings of $8.4 million from previous 2015 Refunded Bonds, means the district has saved about $15.4 million in interest expense since 2015, according to Assistant Superintendent of Business and Operations Sam Barna.

What does this mean for taxpayers?

“What this means for taxpayers is a huge savings in terms of interest costs,” Barna told this reporter. “It’s no different than someone having a mortgage on their home and then refinancing and basically, eliminating much of the interest that you were paying. Now (the district is) paying a much lower rate, so we will be able to pay off that existing debt sooner because we’ll be paying more (on the) principal than we are in interest.”

School Trustee Mike Schweig added the money saved will allow the board to put the funds towards other district projects in the future.

In preparing to sell the bonds, officials secured ratings from Moody’s Investors Service to evaluate the school district’s credit quality.

Moody’s assigned the school district the underlying rating of “Aa3.” The rating agency cited the school district’s growing tax base, above-average socioeconomic indicators, and growing enrollment trend in its rationale for rating Oxford at this level.

The 2016 Refunding Bonds were purchased by money management firms, banks, and insurance companies. The largest investor was State Farm Insurance, which ordered all 2026-39 bonds.

The Refunding Bonds were underwritten by Fifth Third Securities, Inc.

Managing Director Craig Kahler, of Fifth Third Securities, in East Lansing called the district’s market timing “excellent,” stating that a slow holiday week and fallout from Britain’s vote to leave the European Union provided investors with extra cash used to purchase the tax-exempt municipal bonds.

“Whenever we come to a board meeting with these kind of results, we emphasize you are acting responsibly,” Kahler told the board at the July 26 meeting. “If you can turnout a $7 million savings for your community, that’s (to the taxpayers’) benefit. It may not show up immediately on the millage rate, but the taxpayers are essentially spending less for the improvements that have been funded for these kind of issues.”

According to Kahler, the district’s savings could also increase by an additional $8.5 million through reduced borrowing and avoided interest expense associated with the School Loan Revolving Fund participation.