ICO recently closed on the refinance of its long-term bond debt and locked in substantial savings for the institution for years to come. The college took advantage of low interest rates by replacing $42 million in bonds—at a fluctuating interest rate—with a fixed interest rate of 2.86 percent. These savings are a benefit to the institution and will be redirected to support and enhance its optometric clinical education program. To get to the bottom of how the recent refinance affects the college’s financial health, we posed a few questions to ICO’s Chief Financial Officer, John Budzynski.
Why does the college have bond debt?
Well, ICO was founded over 140 years ago, and over the years, the college and its facilities have required some improvements and expansions. The debt was incurred to keep pace with what has been needed to support a very competitive program.
Why is now a good time to refinance?
With interest rates at historical lows, this will allow the institution to maintain a low fixed rate, especially as rates are anticipated to rise in the future.
When people hear the word “debt” it tends to have a negative connotation; can debt be a positive thing for an institution?
It might be surprising, but most institutions carry some level of debt for making improvements to their facilities. The college’s bonds have allowed us to use the operating funds for just that, the operation of the program, while still being able to modernize the facilities.
What does this mean for ICO’s bottom line in the short term and in the long term?
Simply, it means good things for the institution. It ensures the institutions’ financial short term viability and long term stability.
Why should students, faculty, staff, alumni care that ICO has refinanced its debt?
I think all of our stakeholders should know that their institution is a good steward of its resources. Our goal is to make sure the college is financially healthy both in the short term and the long term.