Texas Education

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As if Texas schools didn’t have enough problems

Posted by Texas Education on December 16, 2008

Now the state is going to suspend the school bond guarantee it has provided for 25 years. The Permanent School Fund’s value has gone from $26.6 billion in 2007 down to about $17.6 billion.

The guarantee helps lower interest costs on construction projects. But because of the failing  economy, the diminished value of the funds, coupled with the number of school districts requesting the bond guarantee, have temporarily impaired the state’s ability to back the issuance of school bonds.

Twenty Texas school districts intending to use the bond guarantee program this month have been told their applications will be deferred.

“We recognize that this action may cause some hardship on school districts, but believe it to be necessary to ensure that capacity remains available for bonds that have already been approved during the current period of market volatility,” Adam Jones, TEA deputy commissioner for finance and administration, said in a letter to school superintendents.

So this is going to impeed our schools even further, as I said, as if the schools didn’t have enough problems.

Projects guaranteed by the Permanent School Fund program automatically receive a AAA rating from Moody’s, Standard & Poor’s and Fitch bond ratings services. The high rating gives school districts better interest rates and assures investors they will be repaid.

Every $100 million school bond issue roughly saves taxpayers anywhere from $100,000 to $550,000.

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