Senate Bill 191, which revises certain provisions in a program for capital outlay certificates and lease purchase agreements of school districts, cleared another legislative hurdle this morning.
House State Affairs committee members unanimously passed the bill, which would designate the South Dakota Health and Educational Facilities Authority Intercept Program as the debtor for capital outlay bonds or certificates issued to schools in order to increase the rating and improve interest rates for a bond or certificate. The program is optional for school districts to use.
A mechanism in the bill would allocate a portion of a school district’s state aid to the program if they were to default on a payment for the bond or certificate they went through the program to obtain.
Lt. Gov. Matt Michels said SB 191 is an “enhancement of credibility and credit” for school districts issuing bonds or certificates through the program and would reduce interest rates, save on costs associated with issuing either and provide school districts another purchasing option.
In a previous committee hearing on the Senate side, Lt. Gov. Michels said the chances of default on payment by a district on the bond or certificate are “next to nil” and the addition of the state aid mechanism is in place to protect the SDHA Intercept Program’s rating.
ASBSD Executive Director Wade Pogany said the program has the potential to save schools money in the long run.