The Avonworth School District could save nearly a half million dollars by refunding its bond issues, and the school board is expected to set the process in motion next week.

Director of finance Brad Waters told board members at their work session Monday that interest rates are now in the area where refunding could result in the minimum 2 percent savings considered optimal for refunding.

Waters said that he and PNC Capital markets, which handled the 2003 bond issue, have been keeping an eye on the market for the last eight to 10 months. Last week, he said, conditions reached the point where the district could achieve a 2.25 percent savings.

The bond company also has offered a deal in which the district can act now to refinance its 2001 bond series, which is not eligible for refunding until next June, and thereby save the costs of refunding next year that might make the process less than cost-effective. Board finance committee chairman Frank Mucha said that the company would bear the risk of what might happen with interest rates over the next 10 months, with the trade-off that Avonworth would get only about 78 percent of the possible refunding proceeds.

That would still give Avonworth about $380,000 from the 2003 bond issue and another $120,000 from the 2001 series, Waters said, which could be used next year to reduce the district's debt service.

The final decision on the refunding probably will not be made until fall, Waters said, but the board needs to set the process in motion now, hiring bond counsel and giving Waters and PNC the authority to "pull the trigger" at the best possible moment.

Board members Brenda Barlek, Peter McKay and Jeff Schmid were absent from the meeting.