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CALIFORNIA PUBLIC WORKS BOARD BONDS RATED 'A+' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, April 28 /PRNewswire/ -- The State Public Works Board of the State of California's $58 million (approximately) Lease Revenue Bonds (California Community Colleges) 1993 Series A (Various Community College Projects) are rated 'A+' by Fitch. The bonds will be sold through negotiation by a syndicate led by Morgan Stanley & Co. on or about May 11. The credit trend is uncertain.
 Strong credit fundamentals are provided by 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 will be located at seven of the system's 107 campuses. The rating also is based on the state's long-term credit prospects as the recession continues to be deeper than expected and financial operations deteriorate. The uncertain trend reflects the economy's unclear course, as well as the state's as yet unproven ability to shape financial expectations to prevailing conditions.
 This is the board's third sale for the benefit of the community college districts. Legislation authorizing the program includes the state apportionment withholding mechanism, whereby an amount sufficient to pay the annual lease rental payment is withheld from the first moneys made available from state funding. For the current fiscal year, the state budget provides the 71 community college districts with $1.5 billion in financial support, which is 55 percent of the districts' combined operating budget. This amount represents a decrease from $1.6 billion in fiscal 1992, with the districts primarily compensating by increasing fees. The state apportionment is part of the constitutionally required state funding for education.
 California's financial position continues to deteriorate, and the fiscal 1993 budget is now out of balance. The proposed fiscal 1994 budget carries the 1992 level deficit forward and attempts to reach balance by June 30, 1994 through deep expenditure cuts and other measures. However, the legislature's failure to end the renter's tax credit and to enact certain savings measures will add $475 million to this year's deficit and increase next year's gap by the same amount. For nine months of fiscal 1993, revenues approximate the January estimate. The budget remains under consideration.
 The state issued $3 billion in revenue anticipation notes (RANs) last month, which in effect refinanced $2.5 billion of notes maturing May 12, and has authorization to sell $2 billion in revenue anticipation warrants to provide for cash flow after the June 24 maturity of the RANs.
 -0- 4/28/93
 /CONTACT: Amy S. Doppelt of Fitch, 212-908-0514/


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

KD -- NY117 -- 2330 04/28/93 18:03 EDT
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Date:Apr 28, 1993
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