Fitch Ratings has affirmed the outstanding 'AA+' rating on the Oregon
School Bond Guaranty Program. The Rating Outlook is Stable.
State guarantee - full faith and credit obligation of the state on par
with the state's general obligation (GO) bonds.
KEY RATING DRIVERS
FULL FAITH AND CREDIT PLEDGE: The state's guaranty pledge on qualifying
school debt is a full faith and credit obligation, on par with that of
its own GO bonds. As a result, bonds qualifying for the program receive
an 'AA+' rating, equivalent to the state's GO bonds.
SOUND PROGRAM MECHANICS: Program mechanics allow sufficient time for
state funds to be made available to pay debt service by the debt service
ABILITY TO ISSUE STATE GO BONDS: If insufficient funds are on hand, the
state may issue GO bonds to meet its obligations under the guaranty.
The rating is sensitive to movements in the 'AA+' GO rating of the state
to which it is linked.
The 'AA+' program rating reflects the State of Oregon's (GO bonds rated
'AA+') pledge of its full faith and credit and taxing power to secure
qualified bonds of its school districts. The Oregon School Bond Guaranty
Act (ORS 328.321 to 328.356) became effective in 1998 following the
approval of a constitutional amendment permitting the guaranty of school
district GO bonds by the state. At present, approximately $3.7 billion
across 335 series of bonds are outstanding under the program. Oregon's
constitution limits the state's ability to issue bonds for this purpose
to 0.5% of the true cash value of all taxable property in the state
(current limit would be approximately $2.17 billion).
A set of administrative rules govern procedures whereby school
districts' bonds will be qualified for the guaranty. School districts
must transfer funds to paying agents 15 days prior to the payment date,
and if a school district is unable to do so, the state treasurer must be
notified. If sufficient funds are not received 10 days prior to a debt
service payment date, the paying agent must notify the state treasurer,
who must transfer sufficient funds to cover the district's guaranteed
obligation on or before a scheduled payment date. If sufficient moneys
are not available for that purpose, the state treasurer may either
obtain a loan from any state fund to make the required payment, borrow
money, issue state bonds, or borrow moneys from the General Fund or any
other legally available fund available for this purpose.
A request for qualiication prompts a review of the applying district's
financial condition, and must be submitted no less than thirty days
before a bond sale. School districts drawing upon the guaranty remain
liable for repaying the state, and the state may intercept future
payments to the district for such purpose. Additionally, the State
Treasurer may charge interest or impose fines, or take other legal
action as necessary on school districts requiring use of the program. As
of April 2014, the State Treasurer now requires a school district to
acquire bond insurance or other credit enhancement, or pledge additional
collateral, when a district's total state-guaranteed debt service
exceeds 80% of its state aid on an annual basis.
This rating can be assigned to GO bonds of any Oregon school district
that has been issued a certificate of qualification by the state
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria' (Aug. 14, 2012);
--'State Credit Enhancement Program Criteria' (April 18. 2013);
--'U.S. State Government Tax-Supported Rating Criteria' (Aug. 14, 2012).
Tax-Supported Rating Criteria
U.S. State Government Tax-Supported Rating Criteria
Rating Guidelines for State Credit Enhancement Programs
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
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CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
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