School district saves a bit of money by paying loan off early
By Myrna Trauntvein
A loan that had been spent down, is now paid-in-full early of the mark.
Juab School District Board of Education members agreed to pay the debt after Darin Clark, Business Administrator, explained the possibility of the transaction.
June 21, 2005, the district obtained a $600,000 Fixed Rate Line of Credit, said Clark.
"It was scheduled to be paid off in total in in May of 2014," said Clark.
The interest would have amounted to $133,073.21 and the total repayment would have amounted to $733,073.21.
The money was needed, in 2005, said Clark to do a remodeling of the high school track and the school district office building.
"There are no pre-pay penalities," said Clark. "We have the finances to pay off Zion's Bank."
The payoff this May, 2012, would require a payment of $194,749, said Clark.
"The total savings are not huge," said Clark. "The district will save $8,882.44 but, in this day and age, it is a good thing to do."
The district was paying 4.5 percent interest on the money and was receiving just 1 percent interest on the money being used to pay off the loan.
The revenue raised from the Debt Service levy is legally prohibited from being used for any operating or daily expenses of the district. The Debt Service fund is restricted to paying back the principal and interest of the outstanding debt of the district and has no effect on the operating budget.
The Debt Service levy is the means to repay borrowed money.