New Albany-Plain schools lose gamble on interest rates
The Columbus Dispatch - April 21, 2012
New Albany-Plain (OH) school-district officials were hoping to lock in low interest rates in 2007 when they entered into a complicated debt deal with a private investment company. But plummeting interest rates turned what was supposed to be a hedge against future rate increases into what appears to be a multimillion-dollar loss for the district. At the time the New Albany district entered into the swap agreement, officials could make the case that they were acting in the best interest of the district, based on the facts known at the time, said Gerald Gay of the Department of Finance. “With hindsight, they may certainly wish they would not have done it,” Gay said. “They’re not alone. I’ve seen stories, lots and lots, of municipalities getting into swaps, (and) when they hit the falling interest-rate environment, they’re on the wrong side.”