College's credit upgraded, taxpayers save $444,000
July 28, 2009
TRAVERSE CITY, MI – Northwestern Michigan College on Monday saved taxpayers $444,000 by refinancing $3.75 million in general obligation debt at a lower interest rate.
Approved by the NMC Board of Trustees in June, refinancing was originally expected to save $386,000. However, an upgrade in the college's credit rating by Standard & Poor's allowed NMC to obtain a better-than-anticipated interest rate on Monday's bond sale and increased the cumulative savings.
Standard & Poor's raised the college's credit rating two levels, from A+ to AA. In a July 24 report, the agency said the upgrade reflects NMC's "very strong reserves and good financial management."
Grand Traverse County voters in 1999 approved a millage to fund capital improvements. The current debt obligation is .70 mills. The millage rate is expected to drop to .68 mills during 2010. The debt will be retired in 2020.
The move is one of several steps the college has taken in recent years that have resulted in substantial savings, including:
- A re-bid of healthcare benefits that is saving $900,000 over three years.
- Energy efficiency initiatives that are saving more than $200,000 a year.
- A vehicle leasing arrangement that will save $400,000 over five years.
- Converting to internal management of the Hagerty Conference Center that will save more than $100,000 a year.
NMC's $37.7 million general fund has three primary sources of revenue:
- Tuition and fees (48%)
- Local property taxes (25%)
- State aid (23%)
Due in part to these and other cost-saving measures, Trustees earlier this year voted not to increase tuition for Grand Traverse County residents for the 2009-10 year.
"College faculty and staff have worked very hard to achieve these savings," said NMC President Timothy J. Nelson. "They've done so while adding programs and services, and maintaining the high quality of an NMC education."
Nelson said that, despite decreases in state aid in recent years, NMC has been able to operate more efficiently in order to maintain very affordable tuition.
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Director of Public Relations