SBC FAQs & Resources
GENERAL
What is the State Bond Commission?
The State Bond Commission (SBC), created by La. Const. Art. VII, Sec. 8, receives applications from parishes, municipalities, special taxing districts, and other political subdivisions of the State requesting authority to incur debt or levy taxes. These applications are reviewed for compliance with constitutional and statutory requirements and feasibility, including the ability to repay any indebtedness incurred.
If the applications are in order, they are placed on an agenda for consideration by SBC at a regular or special meeting. At the meeting, SBC either approves or disapproves the application or defers action on the application for further discussion.
In addition, SBC issues debt on behalf of the State and currently manages about $6.7 billion in debt for the State. This debt provides funding for local and state capital outlay projects and infrastructure projects across the State.
When and where does the State Bond Commission meet?
SBC has regularly scheduled meetings the third Thursday of every month. Special meetings can be held as needed at the discretion of the chair. Meetings are usually held in a committee room at the State Capitol, and the location is specified on agendas. Preliminary agendas are usually released one week prior to the meeting. To get on SBC’s agenda distribution list, select the “Submit Request for Meeting Agendas” link under the Helpful Links on SBC’s main webpage.
How many applications does SBC receive each year?
SBC usually receives between 400 and 600 applications each year, with roughly two-fifths being election applications, two-fifths being debt applications, and the remaining fifth being other matters including State debt items and cost of issuance changes.
ISSUING DEBT
Why do political subdivisions issue debt?
Governments often issue debt to receive immediate funds that can be used for a variety of purposes including financing capital outlay projects such as construction of roads, public buildings and sewer and water systems, or for emergency response funding after a disaster or in times of uncertainty.
Where does a political subdivision start?
There are a number of resources publicly available to guide government officials through the process of selling bonds. For example, the Municipal Securities Rulemaking Board (MSRB) Education Center has numerous fact sheets on everything from the duties of various professionals involved in a typical transaction to the lifecycle of municipal bonds. The Government Finance Officers Association’s (GFOA) publication Debt 101: Issuing Bonds and Your Continuing Obligations has good descriptions of decisions and responsibilities of governmental bond issuers during and after issuance. GFOA also has a number of helpful documents regarding Best Practices for Debt Issuance.
What sorts of professionals and fees might be needed in the process?
That depends! Different types of transactions may require different types of professionals and fees. GFOA has information regarding Best Practices for Debt Issuance Transaction Costs that provides a brief overview of different parties, and MSRB has an abundance of aids including Roles and Responsibilities: The Financing Team which walks the reader through different professionals for different transactions. Additionally, GFOA has a Best Practices for Debt Management webpage with useful information.
All documentation that is presented to the Commission, including estimated fees for each transaction, are available on our website by selecting the Meeting Documents Packet link. A new window will open and you can search all of the documents from July 2017 to present.
Additionally, a great tool SBC has developed is a spreadsheet that is updated periodically with actual fees paid on a transaction. The data can be filtered to look for similar entity types and specific types of debt. The spreadsheet can be found here.
In 2018, the Legislative Auditor issued a Performance Audit on Local Government Bond Issuance Costs. In their research, they reviewed fees paid by political subdivisions on their debt transactions. The report outlined ways government entities could potentially save on fees. The report can be viewed here.
Are there any programs available to assist political subdivisions with critical infrastructure needs?
Political Subdivisions that are in need of funds for sewer or water improvements should consider researching the following programs to see if their project qualifies:
DEBT MANAGEMENT
Is there a way to see how much debt the State of Louisiana has outstanding?
Yes! Each year at the regularly scheduled March meeting, the State Bond Commission (SBC) approves the Net State Tax Supported Debt Report that details the State’s various credit types, credit ratings, balances, and the legal ability to issue additional debt. That report can be found under the Helpful Links on SBC’s main webpage. Additionally, check out the Inside the Vault Transparency webpage Treasury maintains for more information on State obligations.
What are best practices for disclosure compliance?
Disclosing information to investors is a legally required component for most public market debt. The Municipal Securities Rulemaking Board (MSRB) Education Center includes Resources for Developing Disclosure Documents, which lists additional resources from various municipal market organizations.
How does a government decide when to refinance debt?
Governments often refinance or “refund” outstanding debt to achieve debt service savings or restructure their debt service burden. The Government Finance Officers Association’s (GFOA’s) Best Practices for Refunding Municipal Bonds provides background on considerations and procedures for refunding obligations.
ELECTIONS
What is the State Bond Commission’s role in approving elections?
According to La. Const. Art. VI, Sec. 22, R.S. 39:1410.60 and R.S. 18:1285(B)(1)(b), State Bond Commission (SBC) approval is required for any political subdivision to incur debt, levy taxes or make changes to a home rule charter in an election. Staff’s analysis of election applications is primarily focused to ensure the proposition is in the proper form to be presented to the voters. For more information about the process of submitting propositions for placement on ballots during an election, see the Secretary of State’s Proposition Packet.
Is State Bond Commission approval an endorsement of the ballot measure?
No. SBC approval is required before the Secretary of State can place certain propositions on a ballot, but the approval is not an endorsement of the merits of a proposition.
SBC uses certain metrics such as breadth of purposes, tax amount and election date in reference to the expiration of a previous tax to determine election classification (new, renewal, continuation, etc.). The charts used are available here.
POST ISSUANCE
What is required once a political subdivision incurs the debt?
According to La R.S. 39:1405.4, a final report shall be submitted to the State Bond Commission no later than 45-days once the debt has been delivered. The form for submitting this information is available here. The form outlines any additional information that is necessary to be submitted to the SBC. Additionally, pursuant to R.S. 39:1410.66, a copy of the notification reflecting filing of Bond Transcript to Political Subdivision must be received within 6 months after the closing date.
Are there reporting requirements to the State if a political subdivision misses a debt payment or violates a bond covenant?
Yes. According to La R.S. 39:1410.62 the State Bond Commission is to be notified in writing whenever any payment associated with outstanding debt is not made timely, including any transfer to a fund that was established when the bonds were issued. La R.S. 39:510 also includes a reporting requirement to the State Bond Commission for debt service sinking fund deposits or debt service payments not made within five business days of when due.