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The Beaufort County School District hopes to save taxpayers $560,000 by investing in government obligation bonds. The savings would help cover the cost of interest on referendum bonds sold to build Whale Branch High School.
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The school board voted Tuesday to buy as much as $15 million in one-year bond anticipation notes from Greenwood County, using money earmarked for construction of the high school but not likely to be spent until 2010. The school district will bid for the Greenwood bonds next week and wants a 4.5 percent interest rate.
"It's a terrific way to utilize money in way that's safe and secure," said board member Reid Eikner, who presented the investment to the board.
Because construction of Whale Branch High School was delayed for years, the deadline for selling 2000 referendum bonds approached before school district needed the money. The district is required to sell referendum bonds within five years.
Typically, the district only sells bonds when construction begins, said Phyllis White, chief operational services officer for the district. Construction on Whale Branch High School, however, didn't begin until this year.
"The 2000 project was so delayed that it got us into a time bind," Eikner said.
The district sold temporary bonds in 2005 and 2006 and issued $30 million in permanent bonds in 2007 at a 4.14 percent interest rate.
The $30 million was invested in a money market account, which yielded about a 4 percent return until the economy began to decline. The annual interest rate dropped to about 2 percent in September and is about 0.9 percent now.
White said the district began looking for other investment opportunities and found the Greenwood County bonds, which are secured by Greenwood County's credit and backed by the state. The district plans to use about $16 million before December 2009 to build the high school and wants to invest the rest for another year.
"In this market, this is the best way we're going to get a return on our dollars," White said. "In light of the market on interest rates, this is an alternative that can give us a higher rate of interest."
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