The Lenoir City School Board approved a plan to refund the school system's existing debt and move to fixed rate bonds. 

Scott Gibson of the financial firm Morgan Keegan attended the meeting and gave the board an overview of the reasons making such a switch is a good idea. 

First he reminded the board of how the financial markets got to be in such a bad position beginning in early 2008 and how the proceeding crisis engulfed the municipal bond insurance companies. "Almost no one will buy the debt today," Gibson said adding the situation was no reflection on the credit of Lenoir City. 

He said the best idea was to "convert to a traditional fixed rate" and lock in loans at 4 percent interest. The school board is looking to refinance the current debt and borrow another $3 million. Gibson said refunding existing debt and borrowing another $3 million at the fixed rate would result in "payments slightly less than you pay now." He added the change would extend the life of the loans for nine extra years. 

The board had the option of borrowing $3.5 million but opted for the $3 million instead. "Three is more in line with what we need," said Jeanie Mowery the system's business manager, adding it would mean, "not as much dipping into fund balance."

Director of School Wayne Miller said the system's conservative management has allowed it to weather the current financial situation better than most and one good aspect of the situation is construction prices are lower. 

Mowery agreed noting the system has not borrowed any money for more than 10 years. 

Miller said this plan would go forward only as long as interest rates remain relatively low. He said if the rates went above 5 percent "this is off the table."  Gibson said he felt "rates are going to go up," adding if the school board could lock in a 4 percent interest rate there would be "nothing to complain about."  He said the next step is to get the Lenoir City Council to adopt a resolution to borrow the funds.

"I'm excited, this is a good thing," Miller said.