N. Y. Districts’ Credit Eyed After State Rating Cut
Forty New York State school districts were placed on Standard & Poor’s CreditWatch last week as a result of the national bond-rating firm’s lowering of the rating on the state’s general-obligation bonds from A to A-.
The action marks the second time in two weeks that a credit-rating agency has downgraded New York State bonds. Moody’s Investors Service earlier lowered the state’s legislative-appropriations bonds in the wake of political inaction in Albany and continuing economic gloom. (See Education Week, Jan. 15, 1992.)
Analysts said Standard & Poor’s action could have more costly and widespread results than the step taken by Moody’s, however, since general-obligation bonds are backed by the full citizenry of the state rather than just legislative appropriations.
The 40 school districts will maintain their current A ratings while the Wall Street firm examines their individual credit strength over the next few weeks, according to a Standard & Poor’s spokesman.
While those districts will be directly affected if downgraded, the degree of impact on education statewide is not yet known. In general, a lower credit rating makes borrowing money more expensive.
Despite objections from Gov. John R. McKernan Jr., Maine lawmakers have approved a bill to set aside part of any state budget surplus--should one unexpectedly occur to help financially troubled school districts.
The measure was attached to a budget compromise cutting $16 million in state aid to schools. Governor McKernan at one point threatened to veto the entire package because of the provision for allocating surplus money, but eventually let it become law without his signature.
If revenues exceed the state’s expectations, the legislation would create a “hardship” fund of up to $4.5 million for schools.
Almost no one expects the state to see a surplus any time soon, however, and schools are already bracing for further reductions in state aid in the next fiscal year.
The Montana legislature was expected late last week to pass a measure that would back local bond issues with funds from the state’s Coal Trust, thus allowing districts to proceed with sorely needed building and renovation projects.
The ability of districts to float bond issues was called into question after the legislature failed to revise the state’s school-construction-funding system in accordance with a 1989 decision by the state supreme court. (‘See Education Week, Jan. 8, 1991 .)
The bill allows the state to guarantee bond issues up to a total of $25 million until the legislature can take permanent steps to rectify the situation during its 1993 session.
The state Board of Investments previously had approved a plan that would have made $15 million in short-term bond-anticipation notes available to districts. But educators and lawmakers were concerned that such a plan would cost districts dearly when the time came to refinance the bonds.
The Colorado Commission on Higher Education would be required to help high-school students understand more about postsecondary institutions, under a bill approved by the Senate Education Committee.
The bill would require the commission to report to elementary and secondary schools on the skills that first-year college and university students need in order to succeed. The measure also calls on the commission to inform schools about the level of achievement first-year college students are showing.
Gov. John Ashcroft of Missouri may not legally withhold $34.5- million in state school aid to pay federally mandated desegregation costs for the Kansas City school system, a judge has declared.
Cole County Judge Byron Kinder ruled this month in favor of a suit brought by the Missouri State Teachers Association and the Missouri National Education Association seeking to prevent Mr. Ashcroft from cutting the foundation formula for education in order to meet the federal mandate. (See Education Week, Sept. 25, 1991 .)
Oregon should merge its K-12 and higher-education state boards, a task force on state government appointed by Gov. Barbara Roberts has recommended.
Under the proposal, the current boards of education and higher education would be fused into a nine-member board of regents, to be selected by the governor.
The task force argued that combining the boards would streamline policy development and reduce administrative costs.
In addition, the task force proposed that the state superintendent of education be appointed by the governor rather than elected--a change that would require a statewide referendum.
Superintendent of Public Instruction H. Dean Evans of Indiana has formally entered the race to unseat Gov. Evan Bayh.
Billing himself as a political “outsider,” Mr. Evans this month officially joined Attorney General Linley E. Pearson and John A. Johnson, a Valparaiso businessman, in seeking the Republican nomination.
Mr. Evans and Governor Bayh have frequently clashed over education policy, and Mr. Evans has accused the Democratic administration of trying to dismantle the state’s school-reform program.
