School Construction Funding in Alaska

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School Construction Funding in Alaska
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School District Options

• School Debt Reimbursement Program
• 1.2 billion outstanding
• 803 million allocable to the State
• Grants
• Local match requirements in some cases
• Amount appropriated in FY 2006-2007

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State Structure

• Boroughs, Cities, and unorganized area
• School Districts
• Lack appropriation power
• Have no taxing authority
• Borough or City
• Authorize annual budgets
• Authorize bond issues
• State Rural Education Attendance Area

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Geographic Challenge
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School Debt Reimbursement

• Created in 1970
• The Program is Legislatively authorized
• Projects approved by the State
• Municipalities issue general obligation bonds
• Reimbursed 60-100 of debt service
• Annual reimbursement amounts are subject to
  appropriation by the State

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Program History
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Positives

• Community involvement
• Local residents share cost of improvements
• State obligation limited by legislation
• Annual funding of debt service is a soft
  liability of the State

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Negatives

• Promotes questionable improvements
• Projects are promoted based on local cost
• Limited authorizations create derby effect
• Creates a hard liability for the community
• Requires economic viability
• This has lead to lawsuits Rural vs Urban
• Inefficient issuance of debt
• Many smaller issues
• Abuse in the use of Premium and Interest Earnings
• Mitigated through the use of the Bond Bank

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History of Bond Bank

• Public Corporation established in 1975
• Bond issues are moral obligations of Alaska
• Self supporting Public Corporation
• A billion dollars in bonds issued
• 485.9 million in bonds outstanding

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Market and Rating Criteria(Assessing Ability and
Willingness to Pay)

• Economic Base
• Demographics
• Employment
• Volatility/diversity of revenues

• Debt Management
• Wisdom of proposed issue
• Debt Capacity
• Existing debt
• Additional debt

Alaska Muni. Bond Bank

• Financial Management
• Reporting budgeting
• Cash flow
• Finance controls

• Administration
• Long--range planning ability
• Accuracy of budgets
• Continuity of management