The security provisions of these programs produce ratings that are based in part or in whole on the state’s creditworthiness and the mechanics of the program, often allowing school districts to finance capital expenditures at lower interest rates than might be available with bonds issued without the credit enhancement.

Since public K-12 education is a critical responsibility of state and local government, many states provide some type of credit enhancement for school district bond issues. These range from a state’s guarantee of timely debt service payments to various types of state aid intercept programs, depending on the state.

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