The Impact of Bond Rating Related Decisions for School Districts: A Multistage Bond Rating Model.

Asserting that school district officials facing the need of extensive capital expenditures must analyze all sources of funding, this paper focuses on the predominant local funding mechanism of the school district bond issue. It presents a bond rating model with three separate stages that relate to the different choices facing a school district official throughout the bond rating process. The choices are whether to have a bond rated (first stage) and whether to insure the bond (second stage). The final stage estimates the rating category. An empirical analysis of the model using data for 148 bond issues by districts from 10 different states during the period from July 1, 1993 through June 30, 1994 indicated that it is mainly the par value of the bond issue and not the credit quality that is the decisive factor in having a bond rated. Rural district's local marketing strategy also contributes to this decision. However, the findings for stages two and three do depend on the economic, demographic, and financial health of the school districts. (Contains 17 references.) (EV) Reproductions supplied by EDRS are the best that can be made from the original document. 1 The Impact of Bond Rating Related Decisions for School Districts: A Multistage Bond Rating Model PERMISSION TO REPRODUCE AND DISSEMINATE THIS MATERIAL HAS BEEN GRANTED BY