Lehighton Area School District has yet to decide on restructuring a 2014 TD Bank Note and 2015 Series A Bond, but a financial firm projects doing so could help the district’s bond rating and lead to better refinancing opportunities in a few years.

Last month, Lehighton heard a presentation from Public Financial Management on a restructuring that would lower the district’s debt service payments in 2021-22 and 2022-23 by $1.88 million and $1.24 million respectively and in turn build up its fund balance. Lehighton would, however, extend payoff dates out longer and add around $2.6 million in debt over the life of the bonds, the last of which falls off in 2045.

“While the restructuring would add cost,” Lehighton Business Manager Edward Rarick said during a finance committee meeting Monday night, “PFM estimates that if we did do it, we could do better when looking to refinance our 2015 bond when it becomes callable in November 2022 and our 2015 A bond when it becomes callable in November 2023.”

Using today’s interest rates, PFM projects those refinancings in 2022 and 2023 could produce a combined net savings of over $4 million.

“So when you factor in the $2.6 million initial cost of restructuring our debt this year, we could see a net savings of $1.667 million if the future refinancing plays out the way PFM thinks it could,” Rarick said.

PFM officials told the district it would still look to refinance the 2015 and 2015 A bonds in 2022 and 2023 respectively, but without the current restructuring and a better bond rating, the interest rate would likely not be as good.

Moody’s Investors Service downgraded Lehighton in August 2020 from A3 to a Baa1 rating.

“The downgrade of the issuer and GOLT ratings to Baa1 reflects the district’s ongoing inability to achieve structural balance, as well as its modestly sized taxable base and elevated debt burden,” Moody’s said in its ratings rationale. “While the district intends to achieve structural balance in fiscal 2021, failure to do so could result in further downward pressure.”

Lehighton board member David Bradley has spoken out against restructuring the 2014 TD Bank Note and 2015 Series A Bond, saying the district would be “buying a better bond rating.”

“We could just spend less than we take in and get our rating up that way,” Bradley said.

Barbara Bowes, a Lehighton taxpayer, suggested during Monday night’s finance meeting that the district could save money in other ways, such as students coming back to the brick-and-mortar school from cyberschool.

“I remember PFM saying it may take three years before the credit rating was raised,” Bowes said. “If it takes 3 years to go up, is it prudent to do a restructuring now? It seems to me being a little more careful with our spending and taking more of a deep dive into what is necessary and what is not may help that as well.”

Others, however, see the restructuring as a benefit in a long-term financial plan for the district.

“This presentation shows what we have discussed already and where we envisioned this going,” Director Nathan Foeller said. “Being able to see the real picture, at least in estimated fashion, helps when trying to make a decision. There are still a lot of unknowns to contend with, but this clearly shows where we are hoping to be able to get. I look forward to seeing this move to the full board.”

Fellow board member Rita Spinelli also said Lehighton’s auditors suggested restructuring would be a “good thing.”

“The only way this is stupid is if we used the money we would save over the next few years in our budget and don’t continue to making bond payments as we have budgeted,” Spinelli said.