The Fayette County Board of Education Monday decided to go the public route to refinance the 1999 bond for which the system owes $24.9 million.

Comptroller Laura Brock told board members the school system’s financial advisor had informed her that the banks that had been approached had strings attached to the refinancing proposal.

The school board in April approved Morgan Keegan & Company as the financial advisor for the refinancing with the idea of saving approximately $1 million in interest charges.

Brock Monday night said she had been told by Morgan Keegan representatives that the banks approached to handle the refinancing had strings attached that would have required the school system to move their accounts to those banks.

“We decided we didn’t want to go down that road,” Brock told board members.

As an alternative approach to the refinance, Brock noted that the interest rate gap is closing and recommended that the school system handle the issue through a public offering.

“We’re still looking at the same dollars in savings,” Brock said of the public offering.

The move to have a public offering of the bonds requires a board resolution that must be signed before the June 11 County Commission meeting since the commission has to approve the measure. The school board is expected to adopt the resolution prior to the June 11 commission meeting.

In mid-April, school system Audits and Financial Reporting Coordinator Tom Gray said the school system owed $24.9 million on the original $56 million bond series from 1999, which was a re-funding of the 1994 bond.

The remaining amount is callable, he said, and the school system wanted to see if the market might produce a lower interest rate.

“The refunding of these bonds will not have an effect on the general fund budget or the general fund millage, but will provide savings to taxpayers through reduced debt service,” Gray said.

The school system has a total of five bond series in place, totaling approximately $180 million. Bond series from 1999, 2001, 2002, 2005, 2007 and a capital lease financial instrument have been used largely for the construction of new schools, the renovation of existing schools and for technology, Gray said.