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CA PUBLIC WORKS BOARD COMMUNITY COLLEGE BONDS RATED 'A-' BY FITCH -- FITCH FINANCIAL WIRE --

NEW YORK, March 8 /PRNewswire/ -- The State Public Works Board of the State of California's approximately $140,000,000 Lease Revenue Bonds (California Community Colleges) 1996 Series A, $106,000,000 Lease Revenue Refunding Bonds (California Community Colleges) 1996 Series B, and $30,000,000 Lease Revenue Refunding Bonds (California Community Colleges) 1996 Series C are rated 'A-' by Fitch. The bonds will be sold through negotiation by a syndicate led by J.P. Morgan & Co. on or about March 19. The credit trend is stable.

Credit fundamentals focus on the demand for education at the community college level and the state's commitment to it, as well as the withholding mechanism for lease payments. The leased facilities, including libraries, laboratories, learning resource centers, and physical education facilities, will be located at 28 of the system's 106 campuses. The rating also reflects the state's long-term credit, marked by a strengthening economy and stabilized financial operations. However, the state will continue to suffer the restrictions imposed by restructuring initiative, including strict property tax limits and a mandated share of the budget that must be devoted to education. These structural problems will continue to limit flexibility. (The state's general obligation bond rating was upgraded to 'A+' from 'A' by Fitch on February 27.)

Legislation authorizing Public Works Board debt issuance on behalf of California's 71 community college districts includes a state aid withholding mechanism. Under the arrangement, an amount sufficient to pay the annual lease rental payment is withheld from the first moneys made available to the districts from state funding. For the current fiscal year, the state's general fund budget provides the community college districts with $1.51 billion in financial support, up from $1.32 billion in fiscal 1995 and proposed to rise again to $1.61 billion in the governor's budget for next year. However, funding in recent years has been reduced in response to California's fiscal problems. The state apportionment to community colleges is part of the constitutionally required funding for education. The state revenue decline in prior years was offset primarily with student fee increases and the statewide property tax shift from counties to school and community college districts. No future fee increases are planned.

Proceeds from the series A bonds will be used to finance 41 new facility and equipment projects. Proceeds from the series B bonds will refund part of the board's 1994 series B bonds, while the series C bonds will refinance a portion of the 1991 series A bonds. Refunding details will be determined at pricing.
 -0- 3/8/96


/CONTACT: Amy S. Doppelt, 212-908-0514, or Claire G. Cohen, 212-908-0552, both of Fitch/

CO: State Public Works Board ST: California IN: SU: RTG

TM -- NYF059 -- 1783 03/08/96 18:28 EST
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Publication:PR Newswire
Date:Mar 8, 1996
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