Current through all regulations passed and filed through September 16, 2024
(A) As used in this
rule, the terms "debt charges" and "securities" have the same meanings as in
section 133.01 of the Revised Code, and
"state education aid" has the same meaning as is in section
5727.84 of the Revised
Code.
(B) The board of education of
any school district seeking approval from the department of education and
workforce and the office of budget and management for participation in the
payment of debt charges under the state credit enhancement program is to submit
to the department of education and workforce and the office of budget and
management a copy of a school district board-approved resolution requesting
participation in the program and certifying the district debt obligations are
in compliance and within statutory debt limitations established for the school
district. In addition to the resolution, the district will submit an
application certified by the treasurer attesting to the accuracy and
completeness of the following information:
(1) The current credit rating or ratings for
the school district, the latest rating report or surveillance rating report
from the rating agency or agencies, and an indication if the school district
has made, or expects to make, an application for a credit rating with one or
more nationally recognized credit rating organizations with respect to the
securities proposed to be issued in connection with the state credit
enhancement program outlined under section
3317.18 of the Revised
Code;
(2) The following debt
schedules in the format specified by the office of budget and management,
including a description of the debt (series name); payment details by payment
date of principal, interest, and total payment; and annual totals by fiscal
year for:
(a) Current outstanding
obligations, as identified in
3317.18(B)(2)(a) of the Revised Code, to which state
education aid from Chapter 3317 of the Revised Code is pledged, including but
not limited to prior issuances under the state credit enhancement program,
obligations purchased and held by the treasurer of the state under division
(G)(1) of section 135.143 of the Revised Code and solvency assistance
advances;
(b) The securities
proposed to participate in the state credit enhancement program as outlined
under section 3317.18 of the Revised
Code;
(c) An aggregated debt
schedule combining all outstanding and proposed obligations detailed in
paragraph (B)(2) of this rule such that the debt schedules of paragraph
(B)(2)(a) plus the debt schedules of paragraph (B)(2)(b) of this rule equal the
aggregated debt schedule.
(3) The latest school district five-year
forecast, including both projections and assumptions, submitted through EMIS
(education management information system) or in such other format as specified
by the department of education and workforce within thirty days prior to
submission of the state credit enhancement program application. If the latest
submission is older than thirty days, it may be submitted provided the
treasurer certifies it still accurately represents the current financial status
of the district;
(4) If the school
district is designated as a fiscal oversight district in accordance with
Chapter 3316 of the Revised Code when the application for participation in the
state credit enhancement program is submitted or at any time prior to the sale
and issuance of the securities proposed for participation in this program, the
district treasurer is to certify a statement to accompany the five-year
forecast detailing the district's current and proposed efforts to restore
financial solvency and how participation in the program may assist in restoring
fiscal solvency. The statement will include disclosure of any loans obtained
from the state for solvency assistance and the unpaid balance of these loans at
the time of application for participation in the program as detailed in the
debt schedules provided in accordance with paragraph (B)(2) of this
rule;
(5) A statement as to how
participation in the state credit enhancement program will enhance the
marketability of the securities;
(6) A statement of the current and projected
state education aid due to the school district per the most recent "Foundation
Payment Report - Statement of Settlement", or any subsequent replacement
report, provided by the department of education and workforce and located on
its website (education.ohio.gov). For purposes of the calculation of the ratios
described in paragraphs (B)(7) and (B)(8) of this rule, the bottom line on this
report described as "Total Payment" is considered to be the amount of state
education aid to be distributed to the school district;
(7) Documentation in the format specified by
the office of budget and management showing the district's calculation of the
ratio of the projected amount of state education aid to be distributed to the
school district for the current fiscal year to the maximum annual debt charges
for debt participating in the state credit enhancement program, including the
proposed securities due in the current or any future fiscal year as documented
in the aggregated debt schedule set forth in paragraph (B)(2)(c) of this rule,
and the identification of the year in which the maximum annual debt charges
occur;
(8) Documentation in the
format specified by the office of budget and management showing the district's
calculation of the ratio of the projected amount of state education aid
remaining to be distributed to the school district for the current fiscal year
to the debt charges remaining to be paid in the fiscal year for debt
participating in the state credit enhancement program, including the proposed
securities as documented in the aggregated debt schedule set forth in paragraph
(B)(2)(c) of this rule;
(9) A
statement regarding the purpose of the securities to be issued in connection
with the state credit enhancement program outlined under section
3317.18 of the Revised Code (if
the issue is for refunding purposes, explain what previous securities are being
refunded and whether they were issued under the state credit enhancement
program);
(10) A statement
indicating the estimated net savings afforded to the school district through
participation in the state credit enhancement program;
(11) Contact information for the school
district's underwriter and/or municipal advisor, bond counsel, and primary
paying agent or fiscal agent if available;
(12) A financing schedule of significant
events detailing the estimated time frame for the issuance and sale of
securities. Approval of the request for participation in the state credit
enhancement program is valid only during the estimated time frame for the
issuance and sale of bonds, which may be extended, but not to exceed twelve
months from the original approval date;
(13) Bonds supported by an income tax under
division (E) of section
3318.052 of the Revised Code
need to include the following documents that can be obtained from the
department of taxation:
(a) Certification
letter providing tax rate, equivalent millage, and, if necessary, effective
millage reduction estimates;
(b)
Certification of the first year's collections pursuant to section
5748.05 of the Revised Code;
and
(c) The report of income tax
returns by level of income for the most recent tax year available.
(14) Any supplemental information
the department of education and workforce or the office of budget and
management requests to evaluate the securities for participation in the state
credit enhancement program outlined in section
3317.18 of the Revised
Code.
(C) Approval of
the request for participation in the state credit enhancement program under
division (B) of section
3317.18 of the Revised Code will
only be granted if the projected amount to be distributed to the school
district from state education aid for the current fiscal year exceeds the
maximum annual debt charges due in the current or any future fiscal year by a
ratio of 2.5 to one and at any time during the current or any fiscal year, the
projected amount of state education aid remaining to be distributed in the
fiscal year exceeds the debt charges remaining to be paid in that fiscal year
by a ratio of 1.25 to one. For purposes of these calculations, debt charges
include outstanding and proposed debt under this program plus any other
outstanding obligations of the school district to which state education aid has
been pledged as the senior lien security.
(D) Any school district with outstanding
obligations approved under these provisions cannot pledge state education aid
due to the school district as senior lien security for any debt unless the
projected state education aid to be distributed to the school district in the
current fiscal year exceeds the maximum annual debt charges due in the current
or any future year on all outstanding and proposed obligations to which state
aid is pledged as the senior lien security by a ratio of 2.5 to one. However,
if after the district has been approved for credit enhancement, the auditor of
state certifies a deficit and the district receives a solvency assistance
advance under Chapter 3316. of the Revised Code, calculation of the ratio for
this provision will not include the solvency assistance advance.
(E) If the department of education and
workforce approves the request of a school district to withhold and deposit
funds pursuant to section
3317.18 of the Revised Code and
this rule, the school district is to identify a primary paying agent or fiscal
agent who is not an officer or employee of the school district. The department
of education and workforce will then enter into a written agreement with the
school district and the primary paying agent or fiscal agent for the
withholding of funds pursuant to section
3317.18 of the Revised Code and
this rule for the payment of debt charges on those securities. This agreement
needs to include the following:
(1) A
provision that states at least fifteen business days prior to the date on which
debt charges on program securities are due, the school district will certify to
the department of education and workforce and the primary paying agent or
fiscal agent the amount of any insufficiency in the amount of funds needed to
pay in full the debt charges when due;
(2) A provision that states at least ten
business days prior to the date on which debt charges are due, the school
district will make a deposit with the paying agent or fiscal agent in an amount
sufficient to pay in full all debt charges;
(3) A provision that states at least ten
business days prior to the date on which debt charges are due, the primary
paying agent or fiscal agent will notify the department of education and
workforce of any insufficiency in the amount of funds on deposit from the
school district from which debt charges are to be paid. Notification under this
paragraph will be provided verballyand in writing to the telephone number(s)
and email address(es) identified in the bond registrar agreement, respectively.
The email communication is to include a copy of the delinquent payment
invoice(s) and the fully executed bond registrar agreement documenting
authority to intercept. In the event that primary paying agent or fiscal agent
is unable to receive confirmation from a department of education and workforce
representative that it is aware of the insufficiency in the amount of funds on
deposit, the paying agent or fiscal agent will contact the district treasurer
and the district's bond counsel for further assistance. The agent will provide
the department of education and workforce a valid state of Ohio ID and affirm
that all EFT banking information is up to date to enable the transfer of funds
in accordance with the timeline established in the agreement;
(4) An attachment which documents the
finalized debt schedule for the securities to be issued in connection with the
state credit enhancement program outlined in section
3317.18 of the Revised Code in
the format described in paragraph (B)(2) of this rule;
(5) An attachment which documents the final
ratio calculations as set forth in paragraphs (B)(7) and (B)(8) of this rule
demonstrating compliance with the provisions of paragraphs (C) and (D) of this
rule. The attachment also needs to include the most recent "Foundation Payment
Report - Statement of Settlement" used to complete the ratio calculations on
the date of sale as set forth in paragraph (B)(6) of this rule;
(6) An attachment which documents the primary
paying agent or fiscal agent has established a business relationship with Ohio
Shared Services, or any subsequent designee of the office of budget and
management, to provide the state of Ohio all current electronic funds transfer
("EFT") banking information necessary to ensure transfer of funds to the agent
within the specified time frames of the agreement. The document has to certify
the current ID issued by the state of Ohio and that the agent agrees to
maintain the ID and EFT banking information throughout the life of the
agreement. The agent will designate the EFT account established as the primary
format for receipt of payments from the state of Ohio to enable the department
of education and workforce to comply with the specified time frames of the
agreement; and
(7) A provision that
states a copy of the fully executed written agreement will be provided to the
department of education and workforce and the office of budget and management
within five business days of the issuance closing date.
(F) Upon receipt of a notification of
insufficiency, the department of education and workforce will immediately
determine whether the school district is able to make the payment to cover the
insufficiency by the third business day prior to the payment date. If the
department of education and workforce confirms or determines that the school
district will be unable to make such payment by the third business day prior to
the payment date, the department of education and workforce will deposit,
provided a valid state of Ohio ID with current EFT banking information has been
provided, with the primary paying agent or fiscal agent by two p.m. (Ohio time)
at least one business day prior to the payment date, in immediately available
funds, the amount of the deficiency (not exceeding the amount of state
education aid due to the school district for the remainder of the state fiscal
year). Payments made under this provision are to be made before any reduction
in state education aid is made for reimbursement of a solvency assistance
advance under Chapter 3316. of the Revised Code.
(G) If a transfer of state education aid is
necessary by paragraph (F) of this rule, the school district in conjunction
with the department of education and workforce will evaluate its inability to
pay the debt charges and will develop and implement corrective actions to
ensure full and timely payment by the school district of future debt charges.
This plan for corrective action is to be presented by way of letter to the
department of education and workforce.
(H) The agreements between school districts
and the department of education and workforce under this rule are irrevocable
as long as any of the respective school district's program securities
participating in the state credit enhancement program outlined in section
3317.18 of the Revised Code are
outstanding.
(I) Any credit rating
agency which has a current rating of this program will be notified of future
material changes to this rule.
Replaces: 3301-8-01
