DALLAS - Fitch Ratings on Friday affirmed its double-A rating and stable outlook on the Colorado School Credit Enhancement Program, which is also known as the school district intercept program. The outlook is stable.
The credit enhancement program created in 1991 covers bonds issued by local school districts. In the event that a district cannot make its debt-service payment, the enhancement program kicks in.
The program covers about $7.59 billion of outstanding debt, according to Fitch.
“The state has access to sizeable borrowable resources estimated at $4.086 billion as of June 30,” wrote Fitch analyst Eric Kim. “An additional credit strength is the state's statutory covenant not to impair bondholder protections under the program.”
Standard & Poor’s rates the program AA-minus while Moody’s Investors Service rates the program Aa2. Outlooks are stable
In addition to the intercept program the Colorado Treasury provides a Moral Obligation Program for qualified charter schools. The program enhances the credit of schools that obtain an underlying investment grade credit rating. As of June 30, the fund had a balance of $3.1 million.
If a default were to drain the balance in the fund, state law directs the governor to notify the General Assembly so that it may consider whether or not to appropriate funds to pay off the bonds.
“Colorado's support for its schools is strong, evidenced by a state equalization program assuming a minimum funding level per pupil,” noted Kim. “Further support is shown by the Treasurer's providing interest-free loans to districts for cash flow assistance.”