CHICAGO — Douglas County School District 1, Nebraska’s largest school system, will enter the market this week with $89.5 million of refunding bonds.

The district will refund bonds originally issued in 2001 to generate savings that will be used to reduce debt service and free up room to issue more new-money debt in the future, officials said.

The district, also known as the Omaha school district, serves two-thirds of the city, which is rated Aa1 by Moody’s Investors Service and AAA by Standard & Poor’s. Debt-service payments are secured by the district’s unlimited-tax general obligation pledge.

With a $19.3 billion tax base, the district benefits from Omaha’s position as the state’s economic hub, as well as the city’s continued redevelopment of its inner-city areas, according to credit analysts.

The refunding is expected to price as early as tomorrow, pending school board approval Monday night. Ameritas Investment Corp. is the senior book-runner.

The savings generated from the refunding will be used to pay down debt to allow the district to issue more new-money debt for capital projects, said Dennis Pool, the district’s assistant superintendent for general administrative services.

“Like everybody, there’s a great political concern about raising taxes at this point in time,” Pool said. “We would like to use the savings against our levying authority, and with the reduced debt service issue new [federal stimulus] bonds.”

Ahead of the deal, Moody’s rated the bonds Aa2. Analysts said the rating reflects the district’s large and diverse tax base as well as its stable enrollment and average debt burden.

The district has $233.7 million of outstanding unlimited-tax general obligation debt and just under $40 million of limited-tax GOs, all of it in fixed-rate mode.

Starting this year, the district will also benefit from a new funding formula that levies a single property tax across a two-county region. The move is expected to mean a boost in revenue for the Omaha school district, where the per-pupil property tax value is lower than in the neighboring districts, officials said.

Approved by state legislation in 2006 and 2008, the so-called learning community concept created a board that will levy a single property tax across Douglas and Sarpy counties, as well as a small part of Washington County, and distribute the revenue among the 11 districts based on need. The law is expected to mean a net revenue gain for the Omaha school district.

“It’s a good thing,” Pool said, adding that the levy is largely earmarked for the general fund but will include some revenue for capital costs.

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