School Loan Fund Interest Rate Dropped to 1.19% | News, Sports, Jobs
By journal staff
LANSING — The interest rate on the School Loan Revolving Fund was recently reduced to 1.19%, saving local school districts about $8 million in interest. This follows the announcement that Governor Gretchen Whitmer has signed Senate Bill 618, allowing for the adjustment of the interest rate of the School Loan Revolving Fund.
The School Loan Revolving Fund assists schools with their borrowing needs for debt service payment. When the fund was created in 2005, a floor of 3% was established. With the lower interest rate, the 124 school districts participating in the program will start saving immediately.
“Every student, in every district, has the birthright to a phenomenal public education so they can pursue their potential,” Whitmer said in a statement. “Through these cost savings, we will have even more resources to invest where they matter most: our students, our teachers and our classrooms. I am proud of the work the Michigan Legislature and I have done to close the funding gap between districts and increase per-student funding to its highest level ever.
“As we look to the future, we have a huge opportunity to continue saving money for school infrastructure, by providing our students with safe and well-equipped learning facilities. We want parents to know their children are safe, supported and successful, and I will work with anyone to continue to make historic investments in education so we can help every child thrive.
The School Bond Qualifying and Lending Program provides a credit enhancement and state lending mechanism for school district bond issues.
The bonds must be qualified by the state treasurer and the bond proceeds must be used for capital expenditure purposes.
Through this program, school districts benefit from the state’s credit rating, which generally results in lower interest rates and costs, and allows districts to borrow from SLRF.
To borrow from SLRF for debt servicing purposes, a district must raise a minimum of seven debt mills and enter into a loan repayment agreement with the state.
“This fund is an important tool for school districts,” said State Treasurer Rachael Eubanks. “Lowering the interest rate means local communities can save money for taxpayers, or they can spend more property tax dollars on building and improving school facilities rather than paying interest to the state.”
The SLRF rate is calculated quarterly and is based on the cost of the program.
To learn more about the School Bond Qualifying and Loan Program, visit https://www.michigan.gov/treasury/0,4679,7-121-1753_56435—,00.html