S&P - Public Finance Criteria (2007). - The Global Clearinghouse

Tax-Secured Debtdebt service to the paying agent and direct the stateto later withhold district state aid to repay thePermanent Fund.Standard & Poor’s rating reflects the fund’sstrong asset quality and the legal provisions limitingthe maximum amount of debt that may be guaranteedby the fund, which is twice the cost or marketvalue of the fund. Additionally, the state’s substantialoversight of the qualifying districts enhances theguarantee program.Texas Higher Education Bond Program (‘AA’)Governing statutes: In addition to the programs thatbenefit elementary and secondary education, anamendment to the state’s constitution enhances debtobligations of certain public institutions of highereducation. In accordance with Article VII, Section 17of the Texas Constitution and the 1985 Excellence inHigher Education Act, there is a continuing annualappropriation of $100 million to support higher education.This rating moves with that of the state.Eligibility requirements: Since 1985, the 26 stateuniversities that do not benefit from the PermanentUniversity Fund—those outside the University ofTexas system and the Texas A&M system, eachreceive a portion of the annual $100 million appropriation.To participate in the program, universitiesmust adhere to the Excellence in Higher EducationAct of 1985.Program provisions: The act allocates the annualappropriation among the universities according to aformula based on:Student enrollment capacity needs;■ Facilities condition;■ Institutional complexity;■ Existence of medical units; and■ Compliance with the Texas desegregation plan.A maximum of 50% of each qualified institution’sallocation may be pledged for debt service on bonds,while the remaining portion will be used directly forcapital improvement projects. According to Vernon’sCivil Statutes Article 4357, a university’s board ofStandard & Poor’s Rated State Credit Enhancement ProgramsState Debt Type Covered Rating Outlook EnhancementCalifornia Eligible city and county bonds A Stable Motor Vehicle license fee and leasesCalifornia Eligible health care bonds A+ Stable Construction Loan Insurance FundCaliforniaSchool districts that havereceived emergency state loans A+ Stable State aid withholding lawColorado Local school bonds AA- Stable State aid withholding lawGeorgia* Eligible local school bonds A Stable State aid withholding lawGeorgia* Eligible local school bonds AA+ Stable State aid withholding law with additionalcoverage of 1.5x state aid and 1x SPLOST or2x state aidIndiana* Local school bonds, leases A Stable State Withholding LawIndiana* Local school bonds, leases AA Stable State Withholding Law with enhancedcoverage provisionsKentucky Local school bonds, leases A+ Stable State aid withholding lawKentucky Commonwealth Universities A+ Stable State aid withholding lawMassachusetts All pre-approved local AA- Stable State direct deposit of state aid topaying agentMichigan Qualified local school bonds AA Neg Constitutional School Bond Loan Fund; stategeneral fund supportMinnesota Eligible local school bonds AAA Stable State standing appropriation lawMinnesota Eligible counties AAA State standing appropriation lawMississippi Eligible local school bonds AA- Stable State direct deposit of annual adequateeducation program funds to paying agentMissouri Eligible local school bonds AA+ Stable State direct deposit of state aid to payingagentNevada Eligible local school bonds AAA Stable Permanent School FundNew Jersey Local school bonds AA Stable Constitutional Fund for the Support of FreePublic Schools100 Standard & Poor’s Public Finance Criteria 2007