Today's topic is financial stewardship. RISD completed four major transactions in the last few months resulting in either substantial savings or increased revenue.
1989 Bond Refinancing In February, we retired $63. 4 million in 1989 bonds issued at an average rate of 7.4 percent and reissued them at an average yield of 4.47 percent, resulting in a 10 year debt service savings of $9.1 million dollars. RISD is the first district in Texas to capitalize on today's low interest rates because way back in 1989 we included an early call feature on our bonds. It was a revolutionary concept in school finance circles back then, and we are reaping the rewards now. The $9.1 million principal and interest savings can be repurposed into $6.2 million equipment notes for such things as technology, library books, band instruments and the like. We donÕt have specific plans yet, but rest assured we will seek community input.
Soft Drink Exclusivity Contract In December, 1997 we approved a contract for the exclusive sale of Coca-Cola beverage products on all our campuses. Based upon current consumption levels, we will earn $9 million in commissions over the next 10 years, with $2.5 million received immediately. Part of the $2.5 million is funding our exciting new summer school program for students in danger of failing TAAS. More is being spent on library books. And weÕre banking over $1 million to continue summer school funding for the next 3-5 years. The remaining $6.5 million includes annual contributions totaling $250,000 for PTA scholarships, $100,000 for teacher awards, $4 million in commissions to schools and the last $2 million will fund special programs.
Teacher Early Exit Program This spring RISD is offering an early exit incentive of one yearÕs salary up to $60,000 to teachers 55 and older, with 25 years teaching experience, to be paid out over four years. Teachers have long requested such a program. If 60 percent of qualifying teachers accept this offer, the district will save $7.2 million, which can then be plowed back into teacher compensation.
1998 Bond Issue In mid-April we will sell another $45 million in bonds. Before then weÕre going to New York to convince Standard & Poor to raise our bond rating from Aa to Aa1. Our MoodyÕs rating is already AA+. The higher rating could result in a $500,000 interest expense savings on our remaining $130 million bonds. We would also join the elite ranks of TexasÕ highest rated districts.
Although the economy is booming, RISD must be constantly vigilant for savings opportunities and alternative revenue sources to keep our schools strong.
