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This is Fred Ball for Zions Bank, speaking on business.
Little more than five years ago, Utah State Treasurer Ed Alter began promoting a school funding plan that would help Utah school districts make necessary improvements without costing taxpayers any more money.
Known as the Utah State School Bond Guaranty Program, it allowed school districts statewide to finance the construction of new schools and expand and renovate existing ones by issuing local general obligation bonds.
But the bonds could be issued at a low interest rate based on the state’s credit rating and not according to the local district’s rating. Utah has earned the highest rating—a triple A (AAA)—which entitles the state to issue bonds at lower interest rates. It’s a rating that hasn’t come by chance. In fact, Ed Alter is one of the reasons that the state’s rating has remained so high.
And so with the State School Bond Guaranty Program, each one of Utah’s 40 school districts could also issue bonds at lower interest rates, because those bonds would be guaranteed by the state.
Well, taxpayers certainly liked the plan, and it became an official program on January 1, 1997.
So, now five years later, has the program lived up to expectations? The answer is yes. Nearly all of Utah’s school districts have used the program to build schools and make needed improvements. In all, more than $1.2 billion in bonds have been issued. And all of them are guaranteed. But perhaps what’s more important is that the program hasn’t cost taxpayers any extra money. The bonds are paid by the school districts in the normal manner. And because they are paid off at lower interest rates, taxpayers have actually saved more than $20 million.
The program’s success has influenced other Western states. Oregon and Washington have implemented the same thing for their school districts, while Idaho has taken many of the program’s mechanics and developed its own variation of the Utah model.
Last year, the program even caught the attention of Harvard University, where it was recognized among other top innovative programs in American government.
So, I salute Ed Alter for recognizing this important program and making it work.
For Zions Bank, I’m Fred Ball. I’m speaking on business.