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Hoover school board saves $1 million by refinancing debt

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The Hoover school board on Monday night and approved the completion of the refinancing of $33 million worth of debt issued in 2012, saving more than $1 million over the next four years.

The school board was able to take advantage of lower interest rates, lowering the school system’s annual debt payments by about $270,000 a year for each of the next four years, said Matt Adams of Raymond James & Associates, which assisted the school board with the refinancing.

That will free up money in the budget for whatever purpose the school board wants, Adams said.

The refinancing does not extend the debt out any longer, he said. It still is scheduled to be paid off by February 2025.

Interest rates already were lower than they were when the school board first issued the warrants in 2012, but the school board was able to obtain even lower interest rates because its credit rating was upgraded by Standard & Poor’s from an AA to an AA+, Adams said.

“It is the second highest rating that Standard & Poor’s offers,” he said. “It’s a very high, very good rating.”

The Hoover school system was able to obtain the rating because of the job that Chief Financial Officer Michele McCay and her staff do and the financial management and policies of the board, Adams said.

McCay said she was very pleased with how the refinancing went since being authorized by the school board in February. The deal was closed on Monday, April 12.

“We did much better than we anticipated,” McCay said. Originally, the total savings was expected to be $875,525, but the final savings ended up being $1,079,000.

McCay also gave the school board a report on how Jefferson and Shelby County real estate tax, auto tax and sales tax receipts are coming in for this fiscal year.

Five months into the fiscal year, through the end of February, the Hoover school board has already received more Jefferson and Shelby County tax revenues than were budgeted for the year. The school board expected to receive $77.7 million in tax receipts from the two counties in fiscal 2021 and as of the end of February had received $78.7 million, McCay said.

The school system typically gets most of its local tax revenues for the year by the end of March, she said.

Jefferson County real estate taxes actually were slightly less than the amount received in the first five months of 2020, dropping from $50.8 million to $50.4 million, but Shelby County real estate taxes rose from $18.5 million to $24.7 million, according to numbers McCay shared with the school board. That meant that overall real estate taxes climbed from $69.3 million to $75.1 million.

McCay said Jefferson County officials told her that real estate taxes were coming in slower than the previous year, so McCay said she anticipates closing that gap a little bit more in March and April.

Auto taxes from Jefferson County rose from $1.67 million to $1.74 million in the first five months of the year, while auto taxes from Shelby County rose from $943,119 to $1,047,516. Overall auto taxes increased from $2.6 million to almost $2.8 million.

The school system also receives sales taxes from Shelby County, and that amount increased from $761,032 to $870,592 for the first five months of the fiscal year, records show.

Interim Superintendent Tera Simmons also asked the board to consider a new salary schedule for principals and be prepared to vote on it at the May 10 school board meeting.

McCay presented the proposed salary schedule to the board at a work session last week. The goal was to develop a fair salary schedule that is competitive with principal salaries in other over-the-mountain communities, that well exceeds the state average and that provides incentive for assistant principals to want to become principals, McCay said.

One problem is that some assistant principals are making more than principals and have no incentive from a financial perspective to want to become principals, McCay said.

The school board recently adopted a new salary schedule for assistant principals that tops out at $104,000. So the new proposal is to pay elementary principals anywhere from $105,000 to $120,662 (based on experience), middle school principals between $115,000 and $131,503 and high school principals $120,000 to $136,815.

The state average currently is $85,656 for elementary principals, $90,376 for middle school principals and $95,551 for high school principals, McCay said. The principals at Hoover and Spain Park are already  the two highest paid high school principals in Alabama, she said.

A salary committee also is recommending revising the salary schedule for central office administrators in the near future, with coordinators, supervisors, directors and executive directors making anywhere from $61,666 to $121,674.

In other business Monday, the Hoover school board:

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