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

Tax-Secured Debtfunds at least one day prior to the debt service duedate. If the guarantee is triggered, the state treasurerwill withhold subsequent payments of money thatwould normally be distributed to the district fromlocal school support taxes and the state distributiveaccount to replenish the permanent fund.New Jersey Additional State Aid Bonds Program (‘AA-’)Governing statute: The New Jersey Additional StateAid Bonds Program is authorized by New JerseyStatutes 18A: 64A-22.1. Additional state aid bondsrequire the state to appropriate funds to pay debt servicefor school district bonds and for county GO bondsissued on behalf of community college districts. Thisrating will move in conjunction with that of the state.Eligibility requirements: In order to participate inthe program, the board of chosen freeholders of acounty where a college is located must receive acertification from the state treasurer authorizingthem to issue bonds or notes in an amount not toexceed 50% of the total cost of the project and notmore than $265 million in principal. The board ofchosen freeholders may issue bonds or notes withinone year of receiving this certification from thestate treasurer.Program provisions: Within 10 days of issuingbonds secured by this program, the county treasureror the treasurer of any other legally empoweredissuer shall provide the state treasurer with a debtservice schedule and the name and address of thepaying agent. The state treasurer will appropriateand pay to the county, on or before the paymentdate, an amount equal to the payment due. Thecounty, or other legally empowered issuer, shall usethese funds solely for the timely payment of debtservice to the paying agent.New Jersey Fund for the Support of theFree Public Schools Program (‘AA ‘)Governing statute: The New Jersey Fund for theSupport of the Free Public Schools Program isauthorized by the Article VIII, Section 4 of the NewJersey Constitution. This rating will move in conjunctionwith that of the state.Eligibility requirements: Local school bondsissued by school districts, municipalities, and countiesare eligible for this program.Program provisions: The program pledges a portionof a fund’s assets for a school district’s debt serviceshould it be unable to meet principal and interestpayments. The bonds carry a specific contractualrelationship between the bondholder and the statefund. The treasurer acts as agent for the fund and, ifneeded, applies monies from the support fund topurchase maturing principal and interest due fromthe bondholder; these payments and purchases continueas long as the issuer remains unable to meet itsdebt service obligations.New Jersey Statutes 18A:56-19, as amended,requires two reserve accounts to be maintained inthe fund. The old school bond reserve account willbe funded in an amount equal to at least 1.5% ofaggregate school district debt issued by counties,municipalities, or school districts prior to July 1,2003. The new school bond reserve account will befunded in an amount equal to at least 1% of aggregateschool district debt issued on or after thatdate. In the event that the amounts in either the oldschool bond reserve account or the new schoolbond reserve account fall below the amountrequired to make payments on bonds, the amountsin both accounts are made available to make paymentsfor bonds secured under the reserves. On orbefore September 15th of each year, fund trusteesdetermine the aggregate amount of school purposebonds outstanding and are responsible for maintainingappropriate reserve levels based on the marketvalue of reserve investments. If at that time, thefunds on deposit fall below the required levels, theState Treasurer is required to appropriate anddeposit into the school reserve such amounts asmay be necessary to meet fund level requirements.To ensure sufficient liquidity, at least one-third ofthe obligations in the fund must be due within ayear. Fund assets are direct or guaranteed U.S. governmentobligations and are valued annually.New Jersey Qualified Bond Program (‘AA-’)Governing statute: New Jersey Statutes 18A:24-93authorize the state treasurer to intercept a portionof city, township, and other local municipality qualifiedstate aid to pay debt service on qualifiedbonds directly to the trustee. This rating moves inconjunction with that of the state.Eligibility requirements: To qualify for this program,the issuer municipality must receive stateapproval for the planned capital improvements andthe scheduled debt service.Program provisions: The statute authorizes thestate treasurer to intercept a portion of city, township,and other local municipality qualified state aidto pay debt service on qualified bonds directly tothe trustee. The state treasurer forwards withheldamounts to the paying agent for payment of debtservice on or before each principal and interest paymentdate. The balance of this state aid is thenremitted to the appropriate municipalities.Additional Standard & Poor’s requirements: Amunicipality’s state revenue must be at least equalto 1x maximum annual debt service.96 Standard & Poor’s Public Finance Criteria 2007