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 dwalrath@m-w-h.com and let me know
your thoughts by the end of April 2009.
Thank
you.
