Amended - Fitch Rates Missouri Board of Public Building's $120MM Special Obligation Bonds 'AA+'.

NEW YORK -- (This is an update to the release that went out on Sept. 25, 2006; it contains revised numerical data in the 4th, 5th, and 6th paragraphs.)

Fitch Ratings assigns an 'AA+' rating to the Missouri Board of Public Building's (the board) $120 million special obligation bonds, series A 2006, scheduled to sell competitively on Oct. 11, 2006. Fitch also upgrades the rating on approximately $778.9 million in outstanding appropriations-backed debt issued by the State of Missouri and several agencies to 'AA+' from 'AA' (full list below), and affirms the 'AAA' rating assigned to outstanding general obligation (GO) bonds of the state.

The rating assignment and upgrades derive from the strength of the lease provisions, recognition of the central oversight of lease debt through the office of administration, essentiality of leased projects, and the state's underlying 'AAA' credit strength. The state's 'AAA' GO bond rating reflects superior bondholder security derived from Missouri's conservative approach to debt, both in amounts owed and provision for repayment, as well as its long record of well-managed and balanced financial operations, although financial pressures persist, particularly Medicaid spending growth. Fitch is not upgrading the appropriation-backed debt of the Regional Convention Center and Sports Complex Authority.

Bond proceeds will fund replacement of a women's correctional facility in Chillicothe. The security for the bonds will be net income and revenues of the board, subject to annual legislative appropriations. The board consists of the governor, lieutenant governor, attorney general; each project funded by it is specifically approved by the legislature. The state covenants to request annually an appropriation from the Missouri legislature to fund rental payments sufficient to pay debt service. The bonds are not secured by a lien on the financed project. The state has a historical record of timely budget adoption.

Missouri has a cautious approach to debt and a low to moderate debt burden. Net tax-supported debt totals $3.6 billion, equal to 2% of 2005 personal income. The state's debt burden has increased in recent years due to significant Amendment 3-funded transportation borrowing. Debt retirement is rapid, with 71% of general obligations amortized in ten years.

State revenues exceeded estimates in fiscal 2006, with collections net of refunds rising 9.2% over fiscal 2005. Missouri's revenue forecast, developed by consensus, projects only modest growth in fiscal 2007 over already strong fiscal 2006 actuals. Fiscal 2007 revenue collections are budgeted to rise 4.5%, with individual income expected to climb 6.3%, while corporate income is expected to rise 7.6%. Sales and use tax receipts are expected to rise 1.8%, in spite of the continued phase-in of Amendment 3-related revenue shifts to the transportation fund. During the first two months of fiscal 2007, actual revenues have exceeded estimates, with net general revenues rising 6.4% compared to the year before. Personal income is up 4.8%, and sales and use taxes are up 0.9%.

Missouri has a history of maintaining fiscal balance through spending restraint. The budget must be balanced, and the governor has the right to withhold funds to achieve balance. The state faces significant spending pressure in fiscal 2007 and beyond, driven by Medicaid inflation, legislated school funding increases and transportation needs. Fiscal year 2007 appropriations are budgeted to grow 8.6% over the prior year, to $20.8 billion. Education spending is rising 3.6% in 2007, reflecting a seven-year phase-in of increases to address funding equity needs. Of concern, Medicaid persistent inflation is helping drive the state's share of Medicaid spending up 16.3 12.6%, to $1.4 billion, in spite of a drop in caseload. Liquidity is ensured by the budget reserve fund, which is fully funded at $513 million.

The Missouri economy is broad based, with a profile very similar to that of the nation. Employment growth has lagged the U.S. since the last recession, with Missouri employment up 0.5% in 2004 and 1.3% in 2005, compared with 1.1% and 1.5%, respectively, for the nation. August 2006 figures continue that trend, with employment up 0.8% over last year, compared to 1.3% for the U.S. August unemployment, at 5.1% in Missouri, exceeds the 4.7% U.S. rate. Personal income per capita in 2005 was 92% of the U.S., ranking it 30th among the states. Second quarter 2006 personal income was up 7.1%, compared to 7.3% U.S. growth.

The series 2006 A bonds will be due Oct. 1, 2007-2031 and are callable beginning Oct. 1, 2016 at par.

Fitch upgrades the following to 'AA+' from 'AA':

-- Missouri Board of Public Buildings special obligation bonds;

-- Missouri Board of Public Buildings state building bonds;

-- Missouri Development Finance Board leasehold revenue bonds;

-- State of Missouri certificates of participation;

-- Southeast Missouri Correctional Facilities, Inc. state lease revenue bonds;

-- Missouri Health and Educational Facilities Authority (University of Missouri-Columbia Arena Project) educational facilities revenue bonds.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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 and procedures are also available from the 'Code of Conduct' section of this site.