The Charleston County School District, the state’s second largest, could soon receive authorization to issue deficit-financing bonds as school districts across South Carolina grapple with funding shortfalls.
The General Assembly is considering a joint resolution that would enable the Charleston district to issue bonds in fiscal 2011 and 2012. The resolution is before the Senate and needs the governor’s signature before bonds can be issued.
Issuing bonds for operating purposes gives the school “another tool” that it “probably will not exercise,” said district chief financial officer Mike Bobby.
Bobby said no dollar amount for the bonds has been considered. Any issuance would mature in less than a year to mitigate the interest rate cost to taxpayers, he said. The district has not issued for operating purposes before.
The school district competitively sold $62.7 million of general obligation refunding bonds earlier this month. Wells Fargo Securities bought the bonds with a 3.06% true interest cost.
The district has underlying ratings of Aa3 from Moody’s Investors Service and AA from Standard & Poor’s. It issues debt with support from the South Carolina School District Credit Enhancement Program, which boosted the Moody’s rating for the refunding deal to Aa1.
All schools are facing pressures because of state aid cuts, said Moody’s analyst Alexandra Cimmiyotti. Since the beginning of fiscal 2010, the Charleston district has had its state aid cut twice, totaling $6.5 million, Moody’s said.