West Virginia higher education officials know they will save money by refinancing bonds sold in the 1990s, but exactly how much savings will be realized is anybodys guess.
The state Higher Education Policy Commission approved a resolution Friday (March 14) authorizing the refinancing of several series of University System and State College System bonds totaling more than $123 million.
The resolution gives HEPC Chairman Tom Jones the authority to decide which refinancing structure to use �€fixed rate, synthetic fixed rate or a combination of the two �€depending on which structure would produce the best savings results at the time of the sale.
HEPC staff members have been working with the investment firm of Salomon Smith Barney and the law firm of Spilman, Thomas&Battle on the refinancing issue.
HEPC Finance Committee Chairman John Hoblitzell said potential present value savings could range from $7.9 million to $11.4 million, depending upon the interest rate environment at the time of the sale and structure used.
“This makes a lot of sense to me,” WVU President David C. Hardesty Jr. told commissioners meeting via conference call.
Hoblitzell said a”strong endorsement”of the refinancing plan was given by WVU Vice President for Administration, Finance and Human Resources Scott Kelley.
Maturity dates of the existing bond issues would not be extended as a result of the refinancing, Hoblitzell noted.
In other business, Chancellor J. Michael Mullen told commissioners legislative conferees continue work at the Capitol on next fiscal years budget. He said no higher education accounts had been finalized yet. Once the conference committee reaches agreement, the full Legislature will convene to approve the spending plan.