Wyo. Code R. 060-0003-13
Loan and Investment Board
Chapter 13: School District Bond Guarantee Program
Effective Date: 02/06/1998 to Current
Rule Type: Current Rules & Regulations
Reference Number: 060.0003.13.02061998
STATE LOAN AND INVESTMENT BOARD
Section 1. Authority.
This Chapter is promulgated under authority of W.S. 9-4-1001.
Section 2. Definitions.
(a) “Board” means the State Loan and Investment Board. (b) “Director” means the Director of the Office of State Lands and Investments. (c) “Office” means the Office of State Lands and Investments. (d) “Stand-alone bond rating” means an independent rating agency analysis and rating of the bond without consideration of the Board’s potential bond guarantee. (e) “Superintendent” means the State Superintendent of Public Instruction.
Section 3. General Policy.
(a) The Board shall guarantee payment of bonded indebtedness of creditworthy school districts under the provisions of this chapter in such a manner and to such applicants as shall, in the judgement of the Board, inure to the greatest benefit of the citizens of the state and represent a prudent use of state permanent funds.
Section 4. Bond Guarantee Program Eligibility.
(a) Applicants. School districts that have met the accreditation standards of the Wyoming Department of Education and are at or below the constitutional debt limit shall be eligible to apply for bond guarantees under this chapter.
(b) Purposes. The Board shall only guarantee bonds issued by eligible applicants to acquire or improve land; to acquire or erect buildings; to enlarge, improve, remodel, repair, or add to buildings; or to equip and furnish buildings.
(c) Bond Types and Ratings. The Board shall only guarantee bonded debt in the form of general obligation bonds that have been considered and confirmed to be investment grade or better by one or more nationally recognized bond rating agencies as designated by the Board.
Section 5. Limits on Bond Guarantees.
(a) Total Outstanding Bond Issues. The total outstanding principal of bonds guaranteed by the Board under this chapter shall not at any time exceed that amount authorized to be guaranteed by W.S. 9-4-701 (j). The $100 million pledged pursuant to W.S. 9-4-701 (j) to guarantee school district bonds shall not be diminished in the event of an investment loss in the Common School Account in the Permanent Land Fund, nor as a result of the state’s pledge of other assets of that account.
(a) Applications. A separate application shall be prepared for each bond issue that an applicant wants the Board to consider for guarantee. Applicants shall submit five (5) copies of their completed application to the Office. A completed Application for Bond Guarantee form, as provided to applicants by the Office, shall be included with each application.
(b) Timing of Applications. Applications for bond guarantees may be filed with the Office at any time and may be presented for Board consideration at any regular monthly meeting, or any special meeting, of the Board.
(c) Information Required for All Applications. If the principal amount of the bond issue is less than $5 million, the applicant shall submit a letter or other written confirmation that the issue is investment grade or better from one or more nationally recognized bond rating agencies as designated by the Board. If the principal amount of the bond issue is $5 million or greater, the applicant shall submit a letter or other written confirmation that the issue has received a stand-alone bond rating of investment grade or better from one or more nationally recognized bond rating agencies as designated by the Board. Districts shall be responsible for paying any rating agency fee.
(i) All applicants shall also provide the following information:
(A) The amount and purpose of the bond issue;
(B) The district’s need for the bond issue;
(C) How the need is assessed in the Department of Education’s annual needs assessment under W.S. 21-15-107;
(D) Whether the district would likely remain within constitutional debt limits after the issue, including a listing of all outstanding debt and associated debt service schedules;
(E) Whether the guarantee would likely result in reduced costs and an estimate of the cost savings.
(F) A financial statement describing the district’s overall financial status and stability.
(G) The status of the accreditation of the district by the Department of Education.
(H) A listing of the payments that the district received from the common school account of the permanent land income fund under W.S. 21-13-301 and from the school foundation program account under W.S. 21-13-313 for the five preceding years.
(I) A statement from the county clerk giving the date and results of the election(s) for approval of the bond issue.
(J) A statement from the county treasurer verifying the current valuation of the district and the outstanding indebtedness of the district.
(a) The Board shall consider each application individually, allowing for comments from the applicant, the Superintendent, the State Treasurer, the Director and any other interested parties. For each bond guarantee approved, the Board shall establish the maximum allowable amount of the bond guarantee and any other terms and conditions it finds necessary pursuant to W.S. 9-4-1001 (c). Once approved by the Board, each bond guarantee is irreversible until the entire bonded debt has been retired.
(a) In order to assure liquidity, the State Treasurer shall keep invested an amount equal to at least 10% of the bond principal guaranteed, in direct U.S. Government obligations or in U.S. Government guaranteed obligations, which obligations mature in three years or less. Pursuant to W.S. 9-4-1001 and 9-4-701(j), the State Treasurer's Office shall administer the Board approved bond guarantees, in accordance with a Memorandum of Understanding dated February 1, 1996, approved by the Board and executed by the Office, the State Treasurer and the Superintendent. All applicants who receive bond guarantee approvals shall also enter into agreements with the State Treasurer pursuant to W.S. 9-4-1001(d). All such agreements shall include the following:
(i) Each participating district shall certify to the State Treasurer that, as of the date of issuance of the bonds, amounts on deposit in the Common School Income Account, which are to be distributed annually to the district, are not reasonably expected by the district to be used (directly or indirectly) for the payment of principal or interest on, or the tender or retirement price of, the bonds or to fund a reserve or replacement fund for the bonds;
(ii) The participating school district shall certify on the date of issuance of any bond guaranteed under the school bond program that no funds received by the district from the Common School Income Account are reasonably expected to be used directly or indirectly for the payment of principal or interest on, or the tender or retirement price of, any bond of such school district, or to fund a reserve or replacement fund for any such bond.
(a) A district shall notify the State Treasurer not less than fifteen (15) days before payment is due if the district believes it may be unable to make a payment of principal or interest on any debt obligation guaranteed by the Board, using the Notification of Potential Default form provided by the Office.
(b) A district shall include a provision in its agreement with its independent paying agent that requires the paying agent to notify the State Treasurer not less than five (5) days prior to the date a payment is due if it becomes aware of a potential default on any debt obligation guaranteed by the Board. The State Treasurer shall pay the paying agent, from immediately available funds, a sufficient amount to cover the bond service payment at least one (1) day prior to the bond service due date.
(c) If the district defaults in the payment and the State Treasurer pays the paying agent as provided in subsection (b) of this section, the payments intercepted by the Board pursuant to W.S. 9-4-1001 (d) (iii) shall be restored to the Common School Account in the Permanent Land Fund and the $100 million pledged pursuant to W.S. 9-4-701 (j)restored. In no event shall the State Treasurer make any payment of amounts on deposit in, or derived from, the Common School Income Account for the purpose of paying any defaulted principal or interest payment in respect to the guaranteed school bond.
(d) If the state makes payment on behalf of a district or if the district defaults in the payment, it shall submit a plan to the Board for approval specifying the modifications in its fiscal practices and general operations that the district intends to implement to resolve the problems which led to its inability to make the payment and to prevent further defaults. The district shall submit its plan within 45 days of the date of the default. The district shall implement all measures as approved and required by the Board pursuant to W.S. 9-4-1001 (d) (iii) (C).
(a) The Superintendent, State Treasurer, Department of Education, or the Board may audit the records of the applicant and inspect the construction and operation of any project funded with bonds guaranteed by the Board. Recipients of bond guarantees shall maintain and provide, if requested, a full and complete accounting of the use and distribution of the bond proceeds from issues guaranteed by the Board.
(a) The Board shall prepare and submit an annual report of the bond guarantee program to those nationally recognized bond rating agencies as designated by the Board, which shall include, but is not limited to the following information:
(i) Market value of investments in the Common School Account in the Permanent Land Fund;
(ii) Amount of debt guaranteed by the Board;
(iii) Disclosure of any draws on the pledged funds due to defaults by a district.
(b) The Board shall report any proposed amendments or revisions to this chapter to those nationally recognized bond rating agencies as designated by the Board, prior to adoption, and shall provide the same with copies of the final rules as adopted and filed with the Secretary of State.