The Denver Public Schools board unanimously voted tonight to restructure the district’s $750 million in pension debt.
A resolution passed 7-0 to convert half of the existing $750 million in variable debt pension certificates into fixed rate certificates.
Fixed rate certificates carry little risk, but also carry higher interest rates.
The termination fees to convert the existing variable-rate bonds to a fixed rate will be determined by the interest rates at the time the deal closes.
A comparison using the most recent rates showed converting one half would cost about $2.4 million more per year than converting one third.
Financial advisors had urged the board to carefully weigh the risks against the cost, noting there is no universally correct answer.
But some board members felt the important vote was being rushed because a liquidity agreement with Brussels-based Dexia that protected the district from financial risk is slated to end in April and won’t be renewed.
The recession has made banks reluctant to become standby purchasers, as Dexia had been, so there is no replacement for Dexia.
Yesenia Robles: 303-954-1372 or yrobles@denverpost.com
