School Borrowing EDUC 511

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School BorrowingEDUC 511
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Long-Term Debt General Obligation Bonds

• Bonding Capacities
• Elementary High School 6.9 EAV
• Unit 13.8
• Principal Only
• 20 Year maturity maximum
• Subject to referendum under tax cap
• Similar to a home mortgage
• Usually sold in 5,000 allotments

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Long-Term Debt

• Negotiated
• Usually Rated
• Moodys
• Standard Poors
• May be insured
• Working Cash Fund Bonds
• 85 of Ed Fund levy plus 85 of CPPRT
• Negotiated or competitive
• Subject to back door referendum

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Long-Term Debt

• Usually sold in 5,000 allotments
• Usually Rated
• Moodys
• Standard Poors
• May be insured
• Health-Life Safety Bonds
• Complete Life Safety Amendment
• Referendum in Tax Cap Districts
• Non-referendum in Non-tax Cap Districts
• Other bond requirements apply

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Long-Term Debt

• Funding Bonds
• Used for Teacher Order and other wage repayments.
• Subject to backdoor referendum
• Refunding Bonds
• Similar to refinancing
• Lack of other funds
• Issued without referendum

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Long-Term Debt

• Building and Site Bonds
• Referendum required
• Site can be purchased through OM
• Planning for building is then more accurate
• Tort Bonds
• Pay legal judgements
• Not included in Bonded Indebtedness
• Not subject to referendum

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Long-Term Debt

• Limited Tax Bonds
• Non-referendum
• Debt Service Extension Base
• Equal to bonds outstanding in the 1994 levy year
• Requirements of bond type
• i.e. back door

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Short-Term Borrowing

• Tax Anticipation Notes (TANs)
• 85 of Levy
• Interest Rate not to exceed 9 or 125 of General
  Obligation Bond Index as published in the Bond
  Buyer
• Payable at maturity
• Can not be issued simultaneously with TAWs
• Backed by general obligation authority
• May be issued for second and possibly third year

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Short-Term Borrowing

• Tax Anticipation Warrants (TAWs)
• Issued and backed by future tax revenues
• 85 percent of past levy extension
• Payable upon receipt of first taxes
• Interest Rate not to exceed 9 or 125 of General
  Obligation Bond Index as published in the Bond
  Buyer
• May be issued for second and possibly third year

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Short-Term Borrowing

• GSA Anticipation Notes
• 75 of state aid remaining to be paid in fiscal
  year
• Up to combined total of 85 of tax levy including
  TAWs and TANs
• ISBE can approve an additional 100
• Teacher Orders
• Payroll Warrants
• Interest at highest rates but not to exceed 9 or
  GAO Index

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Loans Between Funds

• Interfund Loans
• One Year
• ED to/from OM
• ED to/from TRANS
• OM to/from TRANS
• Working Cash
• Loan to Education, OM and Transportation
• Must repay WC with receipt of 1st available taxes
  - after TAWs TANs
• Abated or Abolished

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Arbitrage

• Legal method of using tax free borrowing
  instruments to make money
• Limit of 5,000,000 per year by Internal Revenue
  Code