For immediate release:  March 16, 2000
For more information:  Barton Potter (360) 902-9033

Finance Committee Adopts Guidelines for School Bond Guarantee Program

Guidelines for the program, which pledges the credit of the state to the payment of voter-approved school district general obligation bonds, were adopted at the committee’s regular meeting in the Office of the State Treasurer. The State Finance Committee is made up of Washington State Treasurer Michael J. Murphy (chair), Governor Gary Locke, and Lieutenant Governor Brad Owen.

Today’s approval of guidelines was an important step forward for the program, which will be available to the state’s school districts in May.

“We’re looking forward to getting going,” Murphy said. “This is a good deal for school districts, for the state, and for every taxpaying citizen in Washington.”

When local voters approve a school construction levy, the district can obtain the lowest possible interest rate when it takes the bonds into the marketplace, backed by the state’s all-time high bond rating.

While the state’s guarantee does not reduce a school district’s responsibility for repaying its bond debt, it can save the cost of buying bond insurance. About 80 percent of school districts in the state of Washington now purchase bond insurance to lower their interest rates.

“Now, with the bonds guaranteed, school districts will not need to buy insurance,” Murphy said. “They can pass the savings on to taxpayers.”

The guidelines adopted today outline how school districts can obtain a Certificate of Eligibility to use the bond guarantee program; how to use the certificate to issue bonds; how school district debt is repaid; and the mechanisms to guarantee settlement if a school district defaults on its bond repayment.

Washington voters in November 1999 overwhelmingly approved the constitutional amendment authorizing the School Bond Guarantee Program. The Washington Legislature had created the program with passage of Senate Joint Resolution 8206 during the 1999 legislative session.

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