04.13.09: SAB Funding Update
By David Walrath
The State Allocation Board (SAB) has adopted a multi-year funding process for all previously approved but unfunded extreme hardship projects. The SAB adopted funding the projects at 21% of the project cost for each year for the next five years. Many small districts will have problems finding sufficient funds for their project until the end of the multi-year process.
Other small districts might have energy efficiency or other projects that need funding, but the district does not have the upfront money.
The federal government has authorized school districts and other public agencies to issue taxable bonds with the federal government paying 35% of the interest cost for the bond. This essentially makes them the same as a tax-free bond. The 35% is paid to the public entity or to the bond purchaser as decided at the time the bonds are sold.
These bonds do not require voter approval.
Because small districts have high issuing costs for small face value bonds (less than $5 million), would your district be interested in using the new federal bonds through joining a Joint Powers Agreement (JPA) that could combine the bond requests and thereby lower the issuing costs? Do you want SSDA to work with our Associate Members to form such a JPA?
Please email me at firstname.lastname@example.org and let me know your thoughts by the end of April 2009.